In the first quarter of 2010, FedEx’s net income doubled over the same period in the previous year. Unfortunately, prospects for the second and third quarters failed to meet the expectations of Wall Street, leading to a drop in stock price. As a result of the slow-to-recover economy, FedEx is trimming excess in its money-squandering truck business.
FedEx’s growth is largely based on international air deliveries, a trend that continued in the first quarter. But low demand for appliances such as refrigerators and other large items is eating into the FedEx Freight segment of the business, which lost money once again in the same period.
To help ensure the truck business moves into the black next year, FedEx Freight and FedEx National’s less-than-truckload operations will be combining their operations at the end of January, a move which will result in the closing of over one hundred facilities and the laying off of 1,700 workers. Less-than-truckload shippers are responsible for consolidating shipments from many manufacturers into one truck for delivery.
Coming from such a large company as FedEx, the move is seen by many as a sign that most companies feel the economic recovery is progressing too slowly to expect a return to normalcy any time soon.
Earnings per share are expected to be between $1.15 and $1.35 for the quarter ending in November, falling below analyst expectations of $1.36 per share. Overall stock price fell $2.27 to $83.67.
