FedEx reports loss, has downbeat forecast
FedEx Corp. reported a fourth-quarter loss Wednesday and offered a gloomy outlook as it wrestles with a slumping U.S. economy beset by soaring fuel costs and falling prices for homes.
FedEx predicted 2009 earnings of $4.75 to $5.25 per share, below Wall Street expectations of $5.92 a share. The international package delivery company expects to earn 80 cents to $1 per share in the first quarter of the current fiscal year. Analysts forecast $1.27 per share.
FedEx lost $241 million, or 78 cents a share, for its fourth quarter ended May 31, reversing a profit of $610 million, or $1.96 per share, a year earlier.
Excluding one-time charges, FedEx earned $1.45 per share for the fourth quarter.
Analysts polled by Thomson Financial expected $1.47 per share
Revenue rose 7.9 percent to $9.87 billion from $9.15 billion.
Oil prices increase on news of possible strike
Oil prices rose Wednesday, rebounding from earlier losses on reports that Nigerian oil workers are about to strike and as investors focused on a surprise decline in gasoline inventories last week.
Retail gasoline prices slipped slightly for a second day, a sign that falling demand may be affecting prices and that prices at the pump may have caught up to crude oil’s latest record advance.
Light, sweet crude rose $2.67 to settle at $136.68 on the New York Mercantile Exchange.
At the pump, the average national price of a gallon of gasoline slipped 0.3 cents overnight to $4.075 a gallon, a survey of stations by AAA and the Oil Price Information Service shows.
In Las Vegas, a gallon of regular self-serve unleaded gasoline was a record $4.272 on Wednesday, AAA said in its Daily Fuel Gauge report.
The price is up 19.7 percent from $3.699 a week ago and up 36.4 percent from $3.131 a month ago, AAA said.
Allegiant Travel chief expects quarterly profit
Allegiant Travel Co., the parent of Allegiant Air, which flies passengers from small cities to vacation destinations, will earn a profit this quarter, Chief Executive Officer Maurice Gallagher Jr. said.
Gallagher, speaking at a Merrill Lynch & Co. conference in New York on Wednesday, didn’t provide specifics. Analysts polled by Bloomberg News expect the company to earn 17 cents a share.
Rising fuel costs will erode Allegiant’s operating margin below the first quarter’s 10.8 percent, Gallagher said.
Allegiant had a second-quarter profit of 49 cents a share a year ago, and an operating margin of 16 percent.
Chief: Kroger to pay $16 million settlement
In a memo to employees sent Tuesday, the head of Kroger Co. told employees that the grocery chain has agreed to pay $16 million to settle a racial discrimination and harassment lawsuit.
The lawsuit claimed Kroger blocks the promotions of black employees and pays them less than white workers. A judge has yet to approve any agreement in the suit, which was filed in 2001 in U.S. District Court in Louisville, Ky., on behalf of 12 black workers in six states.
In the memo, Chairman and Chief Executive David Dillon said the money will be placed in a fund and disbursed among black employees who meet certain criteria.
The memo says there was no finding that the Cincinnati-based Kroger engaged in discrimination.
Washington Mutual to shift mortgage business
Washington Mutual said Wednesday it would stop offering two types of mortgage products as part of a shift in its mortgage business.
The nation’s largest thrift said it would no longer offer negative amortizing loan products and will also end its WaMu Mortgage Plus loan.
Negative amortization happens when a payment on a loan doesn’t cover the interest due, and the amount of interest owed is added to the principal balance, increasing the size of the loan.
WaMu Mortgage Plus loans were mortgages with built-in lines of credit and flexible payments.
Hewlett-Packard will reorganize divisions
Hewlett-Packard Co., the world’s largest maker of printers, will reorganize its printing and imaging division, combining business units to reduce costs and increase sales.
Starting Aug. 1, three units will focus on graphics, inkjet printing and Web services, and laser printing and corporate offerings, spokeswoman Alyson Griffin said. The group now has five units.
No job cuts are being announced, though there will be “rebalancing” to reduce staff redundancy, she said.
Congress resists plan to ease flight delays
The Bush administration’s plan to ease nationwide flight delays through an experiment with New York airspace drew fierce resistance in Congress. Lawmakers joined airline officials predicting it will only make matters worse.
The Transportation Department came under withering criticism at a Wednesday hearing of a House Transportation subcommittee into the government’s plan to combat delays by auctioning off some flight slots at New York’s three major airports.
Last year, U.S. airports saw near-record delays, and the government says two out of three flights delayed 15 minutes or more were due to a backup in New York.
To fix that, the government has limited how many flights can take off per hour from New York airports, and plans to auction off some airport slots to control the overwhelming demand for time and space.
But lawmakers and the airlines argued that the planned auction will impose additional costs on airlines and make a mess of day-to-day airport operations.
Fifth Third Bancorp shares drop 27 percent
Fifth Third Bancorp shares plummeted 27 percent Wednesday after the regional bank, facing rising loan losses, said it will slash dividends and try to raise $2 billion with a stock offering and sale of noncore businesses.
Fifth Third also predicted second-quarter earnings would fall far below Wall Street expectations. The bank cited the U.S. housing and credit crisis that has battered the financial sector, hitting particularly hard in Ohio, Michigan and Florida.
Investors rushed to unload Fifth Third shares, which fell $3.47, to close at $9.26, in very heavy trading.
Fraud investigation may result in charges
A federal securities fraud investigation could result in criminal charges as early as today against two former Bear Stearns executives suspected of misleading investors about the risky subprime mortgage market, an official said.
A law enforcement official on Wednesday confirmed reports that Ralph Cioffi and Matthew Tannin, both ex-managers of Bear Stearns Cos. hedge funds that collapsed last year, have been the target of the yearlong probe by federal prosecutors in Brooklyn.
The official, who spoke on condition of anonymity because the outcome of the investigation is pending, said an indictment naming Cioffi and Tannin could be announced sometime today.
Treasury prices rise as stocks stumble
Treasury prices rose Wednesday as the stock market fell for a second straight session, leading investors to place their money in government securities.
The benchmark 10-year note rose 0.44 points to 97.88, and its yield fell to 4.14 percent from 4.20 percent late Tuesday.