Skyrocketing fuel prices, weak economy, and lower demand for freight amid declining U.S. homebuilding and industrial production, together with a hefty charge on FedEx Kinko's name change, are taking their toll on package delivery giant FedEx Corp., which sees a significant fall in its fourth-quarter results. The company is expected to announce the results before the market opens on Wednesday.
However, in the long run, high oil prices are expected to benefit FedEx, as an upcoming boom for Internet shopping to save driving is likely to result in FedEx lifting prices and return to growing profits.
The results of Memphis, Tennessee-based FedEx, a Dow component, will be closely watched by Wall Street, as FedEx and its main U.S. competitor United Parcel Service Inc. are seen as bellwethers of the U.S. economy, since package volumes would be impacted when there is a rise or fall in economic growth. A drop-off in demand for delivery services could point to weakness in many other businesses.
Atlanta, Georgia-based UPS, which is likely to release its second-quarter results in late July, is also expecting poor earnings, saying that it sees no signs of economic strengthening in the quarter. Full Story.......
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