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Fedex Plunges After Hours, Retraces, After Management Blames Guidance Cut On Snow, Margins

Tyler Durden's picture




 

Fedex plunged after hours only to retrace almost all of the drop, after investors were assuaged that the reason for the company's guidance cut was snow (in December, yes unbelievable), and plunging margins (this is one-time: just recall Goldman's most recent lies on the topic). In other words, while QE3, 4 and 5 is now the norm (i.e., perfectly recurring), such things as snow, and plunging profits, are transient. After all, it is only a matter of time before the Vissarionovich Jr. finds a way to subsidize his pet Russell 2000.

From the Press release:

FedEx Corporation (NYSE: FDX) today announced third quarter earnings have been negatively impacted by an estimated $0.25 per diluted share due to loss of revenue and increased expenses resulting from severe winter storms and higher-than-expected fuel prices. The company now expects as-adjusted earnings, excluding FedEx Freight combination costs, of $0.70 to $0.90 per diluted share for the third quarter ending February 28, compared to the company’s previous guidance of $0.95 to $1.15 per diluted share. This guidance assumes no further weather impact and stable fuel prices for the remainder of the quarter. The company reported earnings of $0.76 per diluted share in last year’s third quarter.

 

 

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Mon, 02/14/2011 - 17:26 | 961153 jus_lite_reading
jus_lite_reading's picture

I can't wait until this week's unemployment figures are released. I suspect 480k+ new applications and of course, blamed on the snow.

What excuse will they have come spring?

Mon, 02/14/2011 - 17:33 | 961201 jmc8888
jmc8888's picture

The same one they had last year, rain.

They did it, which is why I think ZH caught onto the whole snow thing early on.

Mon, 02/14/2011 - 17:51 | 961299 whatsinaname
whatsinaname's picture

everybody is learning the game ?

Mon, 02/14/2011 - 18:08 | 961365 william the bastard
william the bastard's picture

This spring's fashionable excuse will be the revolution

Mon, 02/14/2011 - 18:43 | 961531 SheepDog-One
SheepDog-One's picture

When even Charles Dow's showshine boy is talking about *cntrl alt del* and 'no problem, Ben will POMO it', then you know the game is over. 

I know the game is over right now, 2 weeks ago my niece ran up to the computer and said 'Huh, the Bernank POMO'd and closed it green again huh'? 

 

Mon, 02/14/2011 - 17:55 | 961321 system failure
system failure's picture

So those times when they say, "come wind, rain, or snow," you'll know that shit wont be delivered profitably anymore as a result like it once was in the good old days. That is absurd. How can that be since I was watching WGN news out of Chicago when the FedEx truckers said they never ever closed until the one day that LSD drive was finally shut down due to the weather. Somebody is lying. FedEx had one snow day and the entire quarter went to shit. Well if pregancies happen with that one day so can FedEx. That is an useful analogy.......

Tue, 02/15/2011 - 00:29 | 962599 Mike7.62
Mike7.62's picture

I can guarantee you that FDX had more than one snow day in the last two months. How do I know? I was sitting in the cockpit of one of their jets trying to get deiced on at least four occasions in MEM. Keep in mind that trying to get 110 flights out in a matter of two hours is a major feat in good weather, but when you have to deice/anti ice the same amount of aircraft and then launch them, there is no way that it will happen.

 

The wx WAS a major factor. Hell, two of our major hubs, AFW and IND, were shutdown this month for two days because of ice. Think that doesn't impact the bottom line? Think again. It causes backups throughout the system that cause ripple effect delays once the freight is finally moving again.

 

Fuel costs are a very large part of the cost structure, and increases in that do impact the bottom line. Surcharges for these increases only go so far. Jet A is running right at $2.60/G. Each gallon weighs 6.7 lbs. Average fuel burn is 8000 lb/hr/jet. That equates to 1194 G times $2.60, or close to $3104/hr/jet. Run those costs over 400 aircraft, some flying an hour, some flying 14, and you can see how a nickel increase in fuel costs can definitely impact profitability. That doesn't include mx costs, crew costs such as pay, per diem, hotels, and transpo at destination, some of which are continually shifting in price, especially overseas with FX fluctuations.

 

So yeah, I can guarantee that the wx and increased fuel costs hit the bottom line over the last quarter, and probably will next quarter too.

Mon, 02/14/2011 - 17:33 | 961203 No One
No One's picture

Allergies. All this weather leads to blooming of flowers, and the pollen will be unexpected.

Mon, 02/14/2011 - 17:49 | 961286 zebra
zebra's picture

hay fever

Mon, 02/14/2011 - 19:31 | 961703 holmes
holmes's picture

Global warming explains it all year round.

Mon, 02/14/2011 - 18:02 | 961347 jus_lite_reading
jus_lite_reading's picture

Before the French revolution in 1789, the people gave Marie Antoinette the nickname "Madam Deficit," and shortly after TSHTF.

I believe we need to give Ben the nickname, "Dr Deficit" and let history run its course.

 

Mon, 02/14/2011 - 22:12 | 962245 Cursive
Cursive's picture

@jus_lite_reading

I believe we need to give Ben the nickname, "Dr Deficit" and let history run its course.

+1

 

Mon, 02/14/2011 - 19:44 | 961740 Sisyphus
Sisyphus's picture

Premature ejaculation.

Mon, 02/14/2011 - 17:25 | 961157 Gubbmint Cheese
Gubbmint Cheese's picture

"Lions... in Africa?"

 

 

Mon, 02/14/2011 - 17:27 | 961164 Cdad
Cdad's picture

LOL!

Thanks Gubb.

Mon, 02/14/2011 - 17:40 | 961241 Cognitive Dissonance
Cognitive Dissonance's picture

Who would've thunk?

 

Mon, 02/14/2011 - 17:53 | 961314 Cdad
Cdad's picture

Not dissimilar from...

"fffffffffp....He thinks the carpet pissers did this?"

 

 

Mon, 02/14/2011 - 17:41 | 961253 Misean
Misean's picture

ROFL!

Tue, 02/15/2011 - 02:28 | 962768 StychoKiller
StychoKiller's picture

Not just there!

http://www.youtube.com/watch?v=tVc0EZl3AfU

Starting @ 8:52...

Mon, 02/14/2011 - 17:26 | 961159 Ragnarok
Ragnarok's picture

stable fuel prices for the remainder of the quarter.

 

LOL!

Mon, 02/14/2011 - 17:58 | 961328 101 years and c...
101 years and counting's picture

as WTI falls, gasoline and diesel prices keep climbing.  see, chairsatan is able to create inflation, bend over every american on fixed income and screw over the oil producers all at once.

bankers win again.

Mon, 02/14/2011 - 18:36 | 961491 SheepDog-One
SheepDog-One's picture

Well as long as their definition of 'stable' includes 'wildly increasing'.

Mon, 02/14/2011 - 17:27 | 961167 AccreditedEYE
AccreditedEYE's picture

Yeah, this is a strong equity market alright..... LMAO!!!

Mon, 02/14/2011 - 17:29 | 961176 unwashedmass
unwashedmass's picture

 

oh, please? Investors? hello? it was bennie boy's magic hands...cradling another company pivotal to the fantasy....

Mon, 02/14/2011 - 17:29 | 961177 chrisd
chrisd's picture

And you thought pro forma adjustments for one-time items during the Tech Bubble were bad? Welcome to the new normal.

Mon, 02/14/2011 - 17:30 | 961183 jus_lite_reading
jus_lite_reading's picture

What sort of idiots do they have working there?

 

due to loss of revenue and increased expenses resulting from severe winter storms and higher-than-expected fuel prices.

 

Weather can be unpredictable but higher fuel prices are to be expected if they did their DD. Another company, I refuse to do business with.

Mon, 02/14/2011 - 18:37 | 961496 SheepDog-One
SheepDog-One's picture

They had no idea fuel prices were set to rise? Everyone else knew.

Tue, 02/15/2011 - 01:08 | 962650 RockyRacoon
RockyRacoon's picture

Yeah.   And, damn, snow in winter.  Who could have foreseen that?

Tue, 02/15/2011 - 02:32 | 962771 StychoKiller
StychoKiller's picture

Next on deck...Giant Killer Penguins with shooting tentacles (oops, make that flippers!)

Mon, 02/14/2011 - 17:32 | 961185 TruthInSunshine
TruthInSunshine's picture

If we could stop the damn snow, maybe we'd dig ourselves out of our economic morass!

And I hate to be an alarmist, but we're probably going to get rain, really hot and humid weather, and maybe some tornadoes and hurricanes this spring and summer.

That won't be good, either!

Mon, 02/14/2011 - 17:38 | 961230 jus_lite_reading
jus_lite_reading's picture

The poor results at Yahoo will be the result of sunshine in the summer...

This stops now.

Mon, 02/14/2011 - 17:31 | 961189 jobs1234
jobs1234's picture

I cant wait until they start blaming rain in the spring.

 

Or maybe sunlight in the summer - "Our margins were affected by the fact that the sun came out and it was too hot for people"

Tue, 02/15/2011 - 01:10 | 962655 RockyRacoon
RockyRacoon's picture

Pilots were SAD.

Mon, 02/14/2011 - 17:33 | 961195 101 years and c...
101 years and counting's picture

so......as shoppers were trapped inside by the snow, they were unable to shop online because......it was snowing?  um, is it just me, or snow storms keeping people away from the malls should have helped a company like FDX.

 

 

Mon, 02/14/2011 - 17:39 | 961233 More_sellers_th...
More_sellers_than_buyers's picture

stop the madness please I can't take it anymore... why don't they just print dow 100,000 and tell everyone bite me

Mon, 02/14/2011 - 17:39 | 961238 AN0NYM0US
AN0NYM0US's picture

With the snow rationale soon to melt away the good news is that Easter is late this year, which will explain away any shortfall for Q1. If only someone could come up with way to  predict when Easter is going to be.

Mon, 02/14/2011 - 17:46 | 961269 Misean
Misean's picture

It was all nice and mathematically scientific under the Ptolomeic models, right until those upstarts like Galileo said the earth revolved around the sun. My epicycles are still fuming over that...

Mon, 02/14/2011 - 17:42 | 961244 Prof Gulliver
Prof Gulliver's picture

Deleted. The Professor was too hasty on the "save" button.

Mon, 02/14/2011 - 17:43 | 961256 jobs1234
jobs1234's picture

"or snow storms keeping people away from the malls should have helped a company like FDX."

Rationality doesnt really apply at this point. I would think POMO would target this stock tomorrow to keep it and the trannies up in the air.

Mon, 02/14/2011 - 17:45 | 961266 AN0NYM0US
AN0NYM0US's picture

March 4, 2010, 2:58 p.m. EST

Shoppers brave snow to warm up February sales Biggest monthly increase in 27 months

http://www.marketwatch.com/story/resurgent-shoppers-boost-monthly-sales-...

Mon, 02/14/2011 - 17:48 | 961281 Misean
Misean's picture

"I would think POMO would target this stock tomorrow to keep it and the trannies up in the air."

Airborn trannies POMO's...my brain just locked up.

Tue, 02/15/2011 - 02:34 | 962775 StychoKiller
StychoKiller's picture

Kinda makes ya wanna stick a cake mixer up yer nose and turn it to "beat", huh?

Mon, 02/14/2011 - 17:50 | 961296 zebra
zebra's picture

enjoy the red candle while it lasts.

Mon, 02/14/2011 - 17:51 | 961297 whatz that smell
whatz that smell's picture

no worries.... just HFT9000 gunning the humans and their puny stop loss orders... it only hurts cause you got nerve endings, meatbags.

Mon, 02/14/2011 - 17:56 | 961322 curbyourrisk
curbyourrisk's picture

Just blame it on Bush and get it over with.

Mon, 02/14/2011 - 18:00 | 961340 centerline
centerline's picture

W&R at it again.  Damn those guys.

Mon, 02/14/2011 - 18:04 | 961352 SuperRay
SuperRay's picture

WTF! the SPY is actually down AH! I guess Bernanke has to take a crap at 4pm...

Mon, 02/14/2011 - 18:34 | 961475 monkeyfaction
monkeyfaction's picture

I can see the CNBC headline now:

Stocks fell after hours today on news that Ben Bernanke, chairman of the Federal Reserve, took a shit.  One investor was quoted as saying 'What if it's a wet one and he takes a long time to wipe? This whole ponzi scheme could come crashing down by the time he gets back to his desk'. 

Mon, 02/14/2011 - 18:06 | 961359 SuperRay
SuperRay's picture

POMO's MOFO's!

Mon, 02/14/2011 - 18:06 | 961360 TheGoodDoctor
TheGoodDoctor's picture

I can't believe this shit anymore. When will they start to blame global warming? How about the Yankees losing? Cher retiring from performing? The Butterfly Effect? My God. Did someone's homework get eaten by the dog too?

Mon, 02/14/2011 - 18:32 | 961392 william the bastard
william the bastard's picture

The fashionista excuse du le printemps will be "la revolution"... putainz!!!! 

Mon, 02/14/2011 - 18:24 | 961422 max2205
max2205's picture

Down 1% doesn't = 'plunge'. We are getting as bad as Clusterstock here guys. Come on

Mon, 02/14/2011 - 18:29 | 961448 reading
reading's picture

It went from 94 to 88 (give or take a few cents)...I think that stills equals 6+% even in f*cked up Bernanke math...

Mon, 02/14/2011 - 18:58 | 961594 SheepDog-One
SheepDog-One's picture

I dont know if it will stick but looks like fedex is down 10% over in Asia land. Pretty good plunge anyway.

Mon, 02/14/2011 - 19:00 | 961599 Miles Kendig
Miles Kendig's picture

Ya, Fred Smith decided to go night skiing on Mt. Mississippi river for the holidays here in Memphis.  The venue precluded the board from claiming a Sonny Bono impact to earnings, this quarter.

Mon, 02/14/2011 - 19:01 | 961605 Carnegie_IB
Carnegie_IB's picture

fed ex is a failed bus model. hence the reason we dont have the milk man deliver milk to each door. the US postal service cannot survive without govt help. UPS probably will be the next [U]nited states [P]ostal [S]ervice funded by US tax payers.

maybe the pay premium for paper docs will capture the PDF market and force future PDF's to go through them. although, they would need to know what a real business model is first. no thanks to me for the new idea. throw an RFID key or something into the mix.

oh that's right...employees, and unions.

well then, some operation out the garage with a computer will wreck this modern day paper delivery service.

stamp collecting is fun though, more like sticker collecting now.

....darn that snow and investor short term memory. snow the investor over on the eps call and live to beat expectations next quarter.

do we even need eps announcement anymore? what value do they add given that they are always rigged anyway.

just have the operations post their sales, financials daily realtime on their site or some place everyone can see it. do quarterly updates/

then the CEO's can focus on their job and not the one with the best speech wins.

 

 

Mon, 02/14/2011 - 22:18 | 962270 Midas
Midas's picture

The USPS isn't funded by US tax payers.  It is constrained by congress though.  I didn't read the rest of your note so I don't know if there are more errors.

Mon, 02/14/2011 - 21:28 | 962100 The Axe
The Axe's picture

tomorrow's market  stocks go down for 15min, then up for rest of the day FDX up 2 points because,,,its Ben all day everyday....what a fucking joke..this market is....

Mon, 02/14/2011 - 22:17 | 962262 CustomersMan
CustomersMan's picture

 

      In cases where there is extreme volatility, it's always interesting to see WHO was forced to SELL at the bottom and why, and who were the buyers.

 

      In the case of FED EX I'm not sure of the details which would be revealed (partly) in a time and sales printout.

 

       It's like when Oil hit $ 147  , who were the groups that got to sell their oil there. Not every country or seller is able to sell, even if they wanted to, and even if there was demand, because some sellers are intentionally locked out of the trading so that certain others can sell near the $ 147 price.

        Prices, volume, close, etc. do not really tell us the critical information that would let us know who is taking advantage of the situation.

Tue, 02/15/2011 - 03:08 | 962803 sockcutter moto...
sockcutter motorforker's picture

neither rain nor snow nor sleet nor hail... mofo

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