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Donald Broughton of Avondale Partners on FedEx's warning on the global economy.
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-- -- -- -- Right FedEx shares falling today at -- company's latest earnings results.
The Bellwether cut its full year outlook sending a warning signal on the health of the global economy.
My next guest was out in front of it all he downgraded shares of FedEx weeks before the company actually went ahead and cut its first quarter guidance.
Joining me now over the telephone is Donald brought us at -- partners senior transportation analyst -- thanks so much for joining us on the phone today -- he said he downgraded shares of FedEx a couple of weeks ago.
So was this earnings report about what you expected or was actually worse.
No it was about what would that we expected from -- what they earned in the current period.
What was worse is the outlook.
And that's understandable given.
That the most profitable thing FedEx does -- fly -- expressed box across the Pacific or Atlantic Ocean.
What they call international priority expressed.
And if you lose track their worldwide airfreight volumes that we we do you see deceleration in all -- -- Asia way to treat specific way.
This trip transatlantic blame and that deceleration.
There why we downgraded first the group and then both the shares -- -- and EPS.
Says Melissa was saying earlier in our morning planning meeting FedEx is a harbinger great -- in the list of the overall the global economy -- up.
Did this suggest that the US is gonna continue to -- -- even worse.
It's suggested is gonna get even worse and that coincides with container -- you're seeing.
Ocean container volumes start to contractors -- The US truck tonnage.
Get weaker.
-- -- is a well earned reputation for predicting the economy.
And in just about every segment.
We're seeing reasons to -- Nazi yellow flashing lights C actually red flashing lights.
So what's interesting is if you look at shares of apple obviously the iPhone 5 announcement -- last week.
Charging shares up over 700 bucks a pop yet its manufacturing.
We're hearing from FedEx continues to be -- so why are these new products from apple even Microsoft not offsetting that weakness.
Well you know -- and that's a great question.
You what's happened it is this the pre sale.
Everyone's saying I want an iPhone 5 I'll -- up part now.
Allows apple to become more savvy and how they manage their supply chain so not all of those will travel -- at a FedEx jet.
Many of the most will be -- about -- -- networks but that they will be moved.
Our ocean container so won't that it allows them to deliver all those -- -- At a much -- the lower cost of transportation.
Because they can pre planned given never one being willing to pre commit.
Great simple explanation appreciate that Donald so there's this up.
Investor meeting early next month correct -- the CEO Fred Smith said earlier today quote investors will be surprised by the magnitude of the cost cuts.
-- -- -- to come -- onion and said it will not include layoffs so what's your expectation.
My expectation is is that FedEx will do great job of presenting its story they always do they are branded company they -- -- think of it this way fedex's.
-- those few companies like Coca-Cola and Kleenex.
That are synonymous with the service they provide.
And they always do a great job of presenting that especially in her hometown of Memphis.
But -- other thing you have to be careful what is understand that.
They're brand is built upon serviceable on delivering great service and so the reason -- that we can't be true true draconian.
Is is that they would hate to cut to back too far and hurt the brand that they built over the last forty years.
Don rob thank you so much for -- announces a FedEx shares we'll see where they've.
Fly -- from here thanks there.
