In early October, Standard & Poor's analyst Jim Corridore predicted that U.S. and global economies were likely to see accelerating growth in 2008,
At the time, FedEx stock (FDX on NYSE) was trading at around US$107. Since then FDX has plummeted 14% to $92. There's been some bad news, like the $319 million that the company has to be pay the Internal Revenue Service (IRS) in taxes and penalties as the result of a decision that FedEx Ground staff are employees and not independent contractors.
According to Corridore, the major risk to FedEx revenue and profit growth in 2008 is a major economic slowdown coupled with a possible price war against competitors like UPS.
Corridore is more optimistic. He proposes that FedEx revenues will grow about 7% in 2008 down slightly from 9% in 2007. However, double-digit gains in international revenues are expected led by exports out of China.
In 2007, FedEx won authority to operate 30 weekly flights into China. The company plans to grow its delivery business within China from 220 to 320 cities within 5 years.
FedEx international business serves 220 countries and generates about 40% of overall company revenues. Those faster-growing revenues are counter-balanced by two major service contracts with the gargantuan U.S. Postal Service effective to 2010 for air transport of Priority, Express and First Class mail.
With annual revenues of over US$37 billion, FedEx has some 5,000 drop boxes at post offices in 340 American metropolitain locations.
