Investors losing confidence in FraudEx?
Perhaps the troubles at FraudEx will not be swept under the rug for very much longer. The Corporate headquarters for Fraudex are located in Memphis, Tennessee. Here's what that town's paper had to say recently about investors' wary eyes turned towards the nationally certified class action lawsuit:
What surprised Wall Street is the degree that FedEx seems have been caught off guard. Nov. 16, when it downgraded its earnings projections 5 percent for the rest of the quarter and fiscal period, the share price fell like the New Year's ball in Times Square, closing at $96.80, the lowest since February 2006.
"FedEx has a reputation in the investment community of being very much on the ball for having visibility into their business for a quarter or so in advance," said Satish Jindel, transportation analyst in Pittsburgh. "Because of the systems they have in place, you don't expect such change to come between quarters at FedEx."
Seasoned investors jumped on the chance to buy FedEx at a bargain rate. But when UPS didn't offer a similar downgrade, people wondered what was going on at FedEx, Jindel said.
"That contributed to the drop in the share price," he said.
The question for investors now is whether earnings for the second quarter will be on par with predictions when the company releases results Dec. 20.
"They are not doing a good job on air freight volumes, and even in the ground package business there is a slump," said Dick Armstrong, an investor analyst in Stroughton, Wis.
"FedEx has no business line that has the growth activity like they've had in the last few years," Armstrong said. "Everything is kind of stagnant."
While it isn't good news for the company, FedEx certainly isn't alone.
DHL's North American Express business shows shrinkage in the period.
But FedEx also has the concern of growing angst over its classification of FedEx Ground drivers as independent contractors. A suit, brought by workers who contend they are employees, was initially filed in California in 2001 and has mushroomed into a class action covering suits in 36 states.
"It's on every FedEx investor's radar screen," said Rick Paterson, analyst at UBS in New York. "I doubt it's causing many to sell, but it's something you're paying attention to."
With the freight division doing poorly, he said, and the U.S. domestic business long since matured, the company is relying on its robustly growing ground division and international business to carry the weight.
"FedEx has a reputation in the investment community of being very much on the ball for having visibility into their business for a quarter or so in advance," said Satish Jindel, transportation analyst in Pittsburgh. "Because of the systems they have in place, you don't expect such change to come between quarters at FedEx."
Seasoned investors jumped on the chance to buy FedEx at a bargain rate. But when UPS didn't offer a similar downgrade, people wondered what was going on at FedEx, Jindel said.
"That contributed to the drop in the share price," he said.
The question for investors now is whether earnings for the second quarter will be on par with predictions when the company releases results Dec. 20.
"They are not doing a good job on air freight volumes, and even in the ground package business there is a slump," said Dick Armstrong, an investor analyst in Stroughton, Wis.
"FedEx has no business line that has the growth activity like they've had in the last few years," Armstrong said. "Everything is kind of stagnant."
While it isn't good news for the company, FedEx certainly isn't alone.
DHL's North American Express business shows shrinkage in the period.
But FedEx also has the concern of growing angst over its classification of FedEx Ground drivers as independent contractors. A suit, brought by workers who contend they are employees, was initially filed in California in 2001 and has mushroomed into a class action covering suits in 36 states.
"It's on every FedEx investor's radar screen," said Rick Paterson, analyst at UBS in New York. "I doubt it's causing many to sell, but it's something you're paying attention to."
With the freight division doing poorly, he said, and the U.S. domestic business long since matured, the company is relying on its robustly growing ground division and international business to carry the weight.
This is the perfect moment for all of us concerned with the welfare of these misclassified drivers to turn up the heat on these corporate crooks at FraudEx. Keep writing those e-mails and signing those petitions!
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