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VOL. 128 | NO. 121 | Friday, June 21, 2013

FedEx Shares Fall on Worries About Eroding Profits

AP

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NEW YORK (AP) — FedEx Corp. shares tumbled Thursday on worries about eroding profits at its core FedEx Express division.

THE SPARK: The shipping company on Wednesday announced fiscal fourth-quarter results that beat Wall Street expectations, but released disappointing guidance for the current year. Analysts voiced concerns that the outlook could be a sign that profits at its Express division may continue to fall.

THE BIG PICTURE: The Memphis-based company's big FedEx Express division has been dealing with a shift among customers away from priority international air shipments to cheaper but slower options.

Chairman and CEO Fred Smith said that the trend toward economy shipments "is not necessarily a bad thing, and it doesn't necessarily mean that Express can't make more money on the economy business."

THE ANALYSIS: J.P. Morgan analyst Thomas Wadewitz downgraded FedEx to "Neutral" from "Overweight."

"We do not view FedEx's fiscal 2014 guidance as being purposefully conservative but instead we believe it provides an indication of the magnitude of pressure FedEx continues to face in its core Express business, Wadewitz wrote in a note to investors.

The analyst added that FedEx is "geared to serve champagne in a market that wants beer," saying that many FedEx customers are no longer interested in paying for the quickest and most expensive of the company's shipping methods.

Wadewitz added that it might be tough for FedEx to adapt to the change in consumer behavior.

THE SHARES: Down $4.60, or 4.6 percent, to $95.94 in midday trading, after falling as low as $95.64 earlier in the session. Over the past 52 weeks, FedEx shares have traded between $83.92 and $109.66.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 60 120 8,936
MORTGAGES 89 177 12,029
FORECLOSURE NOTICES 0 29 2,457
BUILDING PERMITS 0 188 20,029
BANKRUPTCIES 60 122 7,748
BUSINESS LICENSES 20 36 3,260
UTILITY CONNECTIONS 106 224 11,247
MARRIAGE LICENSES 27 73 2,741

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