Fedex Paints a Gloomy Picture

Fedex reported fourth quarter earnings today and with it dumped cold water on the idea that things are looking up for the economy in 2009.

Fedex swings to loss on charge, fuel, economy
First-quarter outlook below Wall Street consensus

FedEx Corp. said Wednesday that it swung to a fiscal fourth-quarter loss from a year-earlier profit, reflecting a $696 million after-tax asset-impairment charge tied to the acquisition of Kinko's and hurt by the surge in fuel prices and the weak U.S. economy...

...For the quarter ended May 31, FedEx (FDX) posted a loss of $241 million, or 78 cents a share, compared with profit of $610 million, or $1.96 a share, in the year-earlier period. The operating loss was $163 million compared with operating profit of $1.01 billion a year earlier.

Revenue advanced 7.8% to $9.87 billion from $9.15 billion. Adjusted earnings were $1.45 a share, down 24% from a $1.90 a share in the year-ago period. A survey of analysts by FactSet Research expected, on average, earnings of $1.47 a share for the quarter.

"Looking ahead to '09, we do expect conditions to remain extremely challenging and we anticipate in both the first-quarter guidance and the yearly target the current economic weakness will continue and the current level of fuel costs will not mitigate," said Chief Financial Officer Alan Graf on a post-earnings conference call.

For the first quarter, FedEx forecast earnings in the range of 80 cents to $1 a share, down from a year ago when it reported a profit of $1.58 a share. For the fiscal year, the company expects earnings in the range of $4.75 to $5.25 a share.
Analysts, on average, are looking for first-quarter earnings of $1.30 a share and full-year earnings of $6.08.

Fedex lowered it's guidance last month so the latest quarter's earnings are not surprising, however the guidance for the first quarter and for FY09 are well below analysts forecasts. That doesn't jibe with the polyanna view that analysts currently have of corporate earnings in general going into the second half of 2008 and into 2009. Who do you put your money on, Fedex or the consistently behind the curve analysts?