I think it's more than fair to consider FedEx as probably one of the best indicators of the true robustness (or lack thereof) of fundamental economic activity. Their numbers were frightful, and will get worse, by their own forecast.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aw2wg2Dq3QIM&refer=home FedEx to Extend Pay, Job Cuts as Profit Falls 75% By Mary Schlangenstein and Mary Jane Credeur March 19 (Bloomberg) -- FedEx Corp., the second-largest U.S. package-shipping company, said quarterly profit slid 75 percent, more than analysts expected, and sales fell for the first time in at least a decade in the worsening economy. Pay cuts will be extended to some non-U.S. workers and an unspecified number of jobs will be cut as it seeks to remove $1 billion from operating costs by next year, Memphis, Tennessee- based FedEx said in a statement today. The changes will result in a $100 million fourth-quarter charge. A 3 percent decline in U.S. air shipments was the 13th in a row as businesses and consumers curbed spending amid the worst unemployment rate in 25 years. International air shipments tumbled 13 percent. The company, considered a bellwether for the U.S. economy, delivers everything from mortgage and banking documents to clothing and electronics. âThe fact they missed the estimate that had been already coming down sends a message that maybe we had been living on a bit of false optimism recently,â Dan Ortwerth, an Edward Jones & Co. analyst in St. Louis, said in an interview. âNear term -- staying bad. Anybody who thought differently was probably fooling themselves a bit.â Net income for the fiscal third-quarter dropped to $97 million, or 31 cents a share, from $393 million, or $1.26, a year earlier, the company said. Revenue fell 14 percent to $8.14 billion for the period ended Feb. 28. Per-share earnings trailed the 46-cent average of 16 analyst estimates compiled by Bloomberg. Lower Expectations FedEx said it expects earnings of 45 cents to 70 cents a share in the fiscal fourth quarter. The company was estimated to earn 70 cents, the average of 16 analyst estimates compiled by Bloomberg. âItâs a very, very difficult market to forecast right now because of this unprecedented decrease in international business,â said David Campbell, a Thompson Davis & Co. analyst in Richmond, Virginia. To trim costs, FedEx in December cut Smithâs salary by 20 percent and reduced pay by 5 percent to 10 percent for other salaried workers. The company also suspended retirement account contributions for at least a year and froze hiring. FedEx today said it would extend the pay reductions to an unspecified number of non-U.S. workers and would reduce capacity in both its FedEx Express and FedEx Freight units. âThe downturn in our industry and the severity and expected duration of the recession require that we take additional actions,â Chief Executive Officer Fred Smith said in the statement. FedEx fell 25 cents, or 0.6 percent, to $42.80 at 9:04 a.m., before the start of regular New York Stock Exchange composite trading. To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net Last Updated: March 19, 2009 09:09 EDT