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Two Ways: FedEx Delivers Poor Results


Strengthen your portfolio in good times and bad.


FedEx (FDX) reported third-quarter earnings far below Wall Street expectations today. Net income plunged 75% to $97 million, or $0.31 a share, down from $393 million, or $1.26 a share, from a year earlier. According to the Wall Street Journal, revenues declined to $8.14 billion owing to lower fuel surcharges and shipment weights.

FedEx plans to cut about $1 billion in expenses in the coming fiscal year. It projects fourth-quarter earnings between $0.45 and $0.70 a share, below consensus estimates of $0.72 a share.

Despite the negative headlines, shares of the shipping giant closed higher by 4.8% to $45.10.

See Professor Kevin Depew's Five Things: Fed Fires Final Bullet; Market Shrugs for more on the economy.

From the Bull Pen: FedEx is a member of the Dow Transports, which Professor Sadana suggests keeping an eye on. Reaction to the news is positive so far, which is good because the S&P 500 likely won't rally without Fedex and the rest of this index. Bulls can use the S&P Depository receipts (SPY); a pullback to near 75 shouldn't be ruled out.

From the Bear Cave: Bears can keep an eye on General Electric (GE). Those considering the downside can use puts (defined risk) as Professor Bill Feingold mentioned on the Buzz earlier this week.

What a long week, but we still have one more day left. Have a great night and we'll see you in the morning!

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