Fedex (FDX) wises up

Posted Feb 10th 2009 8:30AM by Douglas McIntyre
Filed under: Analyst Upgrades and Downgrades, FedEx Corp (FDX)

It is starting to occur to Fedex (NYSE: FDX) that its future is full of cost cutting. Fuel costs may be down, which will help gross margins, but air freight shipments could drop all of this year and perhaps in 2010.

At $56, FDX is off a 52-week high of nearly $100. The company is going to cut 900 people in its Fedex Freight division and, as demand for overnight and ground delivery keeps eroding, those cuts are only the tip of the iceberg.

Fedex is in a game it cannot win now. It has a business that is as affected as any by the recession. It also competes with other private delivery companies and every postal system in the world.

Over the last year, almost every analyst rating on Fedex that has changed has been a downgrade. With no chance of revenue rising. Fedex is going to have to cut its way back into the good graces of investors.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Tags: FDX, inthenews