Wednesday, June 17, 2009

Fedex: Relax It's ....Losing Money

Fedex (NYSE:FDX) Reported Q4 and year end numbers. They played out the Dow theory that transportation has to confirm. We do not have a confirmation. Furthermore management is suggesting the future looks bleak. Hard to disappoint after this announcement as nothing was promised or implied. What could they do differently? Take a look at the fuel costs which just went up off the graph. They produce stats on revenue per package and per lb of freight. They need to track fuel costs in the same fashion. They need to acquire fuel strategically not just when the truck runs empty. The entire thinking is horizontal. Buy Watkins, buy Kinkos and then you control the customer. But you need to control the cost to be truly successful.

If Fedex can become the fourth largest airline why can it not become something significant in the fossil fuel business and control costs while protecting profit.