Archives

[more]

To optionmgr: I agree with you. They opened
their big mouths touting how wonderful 4th Q.
earnings would be. Maybe they've learned their
lesson so this won't happen with future earning's
reports. Hopefully, this was a hard learned
lesson about playing with the "big boys". I would
have liked to have seen earnings come out after
the FOMC meeting, instead of today. Live & learn.
Timing is everything.

 

[zippo]

UPS's Gains Fail to Satisfy Investors
As Profit Rises 37%, Stock Falls 8.1%
By RICK BROOKS
Staff Reporter of THE WALL STREET JOURNAL


ATLANTA -- United Parcel Service Inc., issuing its first earnings report since going public in November, said fourth-quarter net income jumped 37%, but disappointed investors who had hoped for an even bigger boost from deliveries of merchandise sold through the Internet.


The world's largest package-delivery company said profit rose to $661 million, or 56 cents per diluted share, from $482 million, or 43 cents per share, on a pro-forma basis a year earlier.

Though the earnings per share for the latest quarter were a penny above the consensus forecast compiled by First Call/Thomson Financial, some investors dumped the stock, because profit failed to beat estimates by a wider margin. The shares were down $5.25, or 8.1%, to $59.6875 Monday in New York Stock Exchange trading at 4 p.m. It was the sharpest one-day decline yet for UPS, which fell to its lowest point since the company's initial public offering last fall.

Revenue grew almost 12% to $7.45 billion from $6.66 billion, boosted by higher domestic volume and the continued turnaround of the company's international operations.

The 93-year-old company had enjoyed a honeymoon on Wall Street following its IPO. In their first day of trading, UPS shares jumped 35% to $67.25 from their offering price of $50, and enthusiasm surged again in December after rival FDX Corp., now called FedEx Corp., reported lackluster earnings. Most recently, the surge in retail sales made through the Internet during the Christmas season left at least some investors confident that UPS would get a significant boost from delivering gifts ordered online.

But Monday UPS said its average daily package volume in the U.S., an important indicator of the number of Internet-related packages delivered by the company, grew just 5.6% in the fourth quarter to 13.1 million packages. That was smaller than the company's third-quarter increase of 6.8%.

'A Very Large Percentage'

UPS officials said they weren't disappointed by the Christmas results, though they acknowledged it still is difficult to determine how much additional volume at UPS is being generated by e-commerce. "We think we captured a very large percentage" of e-commerce shipments during the holiday season, Robert J. Clanin, chief financial officer of UPS, said in an interview. Eight of the company's 10 largest shippers during the period were "heavily focused on the dot-com channel," a spokesman added.

Many analysts said the slip in the company's growth rate for domestic package volume isn't necessarily a sign that UPS is failing to capitalize on the Internet economy. "Nothing about the company has changed," said Gregory E. Burns of Lazard Freres & Co. in New York. "It's just a case of expectations getting ahead of what were in the end very strong numbers."

Alex V. Brand, an analyst at Scott & Stringfellow Inc. in Richmond, Va., said the stock was ripe for a fall as a result of its lofty valuation following the IPO. "There was little room for anything but a blowout quarter ... [and] what they reported was a good quarter, a solid quarter."

Strong International Results

One unquestionably bright spot for UPS: Operating profit in the company's international division more than doubled to $82 million in the fourth quarter from the year-earlier $37 million, boosted by a 9% increase in revenue to $1.03 billion. The company also said its standard next-day delivery services in the U.S. grew about 10%, while daily international export volume jumped about 18%.

Fuel spending surged $53 million in the quarter, or about one-third, with most of the spike coming from rising fuel prices, but Mr. Clanin said UPS has "no intention at this point" to impose a fuel surcharge.

UPS officials said the company's overall outlook for 2000 is unchanged, and Mr. Clanin was sanguine about the stock's skid. "I guess the market will be the market," he said, but declined to make any profit projections for the current quarter or year.

Separately, Airborne Freight Corp., one of UPS's largest U.S. competitors, reported a 55% decline in fourth-quarter earnings, which fell to $17.3 million, or 35 cents per diluted share, from the year-earlier $38.3 million, or 78 cents per share. Airborne of Seattle said earnings were hurt by "flat" growth in domestic shipments and higher fuel costs. The company, which issued its results after the close of regular trading, had warned last month that its profits would fall short of expectations.

 

[zippo]

UPS 4Q Beats Consensus, But Shares Hit New Low
By NANCY FONTI

NEW YORK -- Growth in shipping volume and shifts to premium products helped profits at United Parcel Service of America Inc. (UPS) climb 37% in the fourth quarter.

Reporting its first quarterly earnings since its public offering in November, UPS, the Atlanta shipping company, said profits rose to $661 million or 56 cents a diluted share, from $482 million, or 43 cents a year earlier. Revenue rose 11.7% to $7.45 billion, the company said.

The earnings beat an analysts' consensus estimate from First Call/Thomson Financial by a penny, but investors sent UPS shares to a new low, perhaps frustrated that 1999's so-called e-Christmas did not help the company muster a bigger upside earnings surprise, analysts said. NYSE-listed shares of UPS recently were down 4 13/16, or 7.4%, to 60 1/8. The stock reached an intraday low of 59, passing the post-offering low of 61 set Nov. 22, about two weeks after UPS went public.

"Investors may be a little disappointed that they didn't see more volume growth in the domestic business, which is where you would see growth from e-commerce," said Deutsche Bank Alex. Brown analyst Anthony Gallo.

Analysts noted UPS's product mix in the U.S. has improved, with its next-day air and deferred service posting 10.4% and 11.9% volume gains respectively and domestic operating profit climbing 20.5%. In addition to volume growth - perhaps at the expense of competitors - some UPS customers have shifted to those higher-yielding categories from UPS's less-expensive ground service, which grew 4.6% in the quarter, analysts said.

UPS said daily domestic package volume rose 5.6% and domestic revenue climbed 10% to $6 billion. Domestic package operating profit rose 20.5% to $965 million.

While rivals Airborne Freight Corp. (ABF) and FedEx Corp. (FDX) have experienced slower U.S. growth in recent quarters, UPS executives said domestic growth will continue at a steady clip, without giving specific projections.

Meanwhile, international volume rose 5.5% and international revenue jumped 9.1% to $103 billion. International operating profit climbed 121.6% to $82 million.

UPS sees 20% growth in 2000 in export volume in Europe and Asia, chief financial officer Robert J. Clanin said during the call. Export business, up 18% in the latest quarter, refers to shipments made between two countries.

Non-package revenue climbed 71% to $344 million, and operating profit in that segment was $83 million, up 177%, and helped by the company's logistics segment.

For 1999, UPS earned $883 million, or 77 cents a share, including a $1.44 billion tax assessment taken in the second quarter. In 1998, UPS earned $1.74 billion, or $1.57 a share.

Shares of UPS continued to trade lower Monday afternoon, recently changing hands at 60 1/4, down 4 11/16 or 7.2% on volume of 3.7 million shares, compared with average daily volume of 4 million shares.

 

[more]

optionmgr: I talked to my broker this
morning to get his take on the fall of
the stock and he mentioned that UPS
should take a lesson from MSFT. They
have perfected the "pre-earnings" technique.
after having been bitten themselves once
too often. I thought UPS, even though
not public 'til recently, had experts in
the investment field. I'm not an expert,
but even I know that you don't blow
your horn prior to earnings being announced.
After 4 or 5 years of watching CNBC, that
stuff does tend to sink in. Thanks Kahuna
Thanks Brain. Thanks Mark.

 

[my2cents]

I've also heard that some of the big institutions take advantage of naive IPO companies by selling off big blocks of stock to take a profit and then buy back in once the price is driven down.

 

[more]

The stock price was as low as $58 today and closed
over $60. Maybe now the "one day" disciplinary
action from the street is over. UPS has been
punished and maybe now it can get on with the
growth that it should be experiencing. That was
some roller coaster ride!!

 

[brownwife]

moreluck,
Sorry, but could you explain the meaning of "disciplinary action by the street"? The term is new to me. Thanks....

 

[26t]

More Luck, Do you think that our top management might be smarter than we make them out to be? What if they knew that sending out the expected earnings for the 4th Qtr would make the price drop just before the tender offer. That would mean that if the price went down they would get more shares for the $5.4 Billion they are going to spend to get the shares back?
Just a thought! See you on the golf course! 10 and counting!

 

[more]

To Brownwife. The "street" doesn't like smugness.
When UPS touted their upcoming terrific earnings a
month before earnings were to be reported, analysts probably raised their expectations and
because of that UPS was shown as beating the street by only a penny. Tyson Chicken beat the
street by a penny also. I don't put UPS in the
same category as Tyson as far as companies go, but
they kinda came out the same. Had UPS not crowed
so loud, maybe the street expectation may have
been $.50 and when UPS came in at $.56, everybody
would be pleased with the upward movement.
Sometimes, the street also rewards, as in the
case of Amazon yesterday. They were expected to
report $-48 and came in with $-.55. They lost
more than the street expected them to lose and
yet they're up $12.00 a share today. Sometimes
there is just no rhyme or reason. If you look at
the history of Microsoft reporting earnings, they've been through what UPS just went through.
Now, MSFT doesn't paint a rosy picture for the
analysts, even when it is rosy. I guess it's a
finesse that UPS will learn over time. Sorry to
ramble so much.

 

[more]

To 26T: Your angle makes a lot of sense too. It's also a little scary to think of that kind of power out there. Hopefully then, after the tender offer, our stock can go back to growing normally. You won't see me on the golf
course, but my hubby will be there everyday in
about 9 days. Good Luck!

 

[xbrown]

I believe all who say that the street punished UPS by moving their lower estimates closer to actual earnings are on the $$$$$. It was a slap on the wrist from big daddy who is telling the new kid on the block to pipe down, stop bragging, play the game and we'll all prosper. I am disappointed about the abrupt $19 decrease in value, but I believe it will bounce back. It's not a dead fish stock. I saw what came through the system during peak, our 4th Q was outstanding. Hey, what does anybody make of your OPL statement?

 

[xbrown]

I decided long before peak that UPS was not a way of life. I missed the early years my 2 oldest and I made a decision not to miss the 2 younger ones. I didn't quite make a mil. but the anticipation and the excitement of the stock as a C note performer will make me think twice before cashing in. Since leaving in early Jan., the 3 a week headaches have disappeared. No golf because I don't golf. Plenty of honeydo stuff and getting reaquainted with the loves of my life..............my family. Enjoying life with less stress.
Disappointed in the recent performance of the stock, but I still believe it's a $100 stock, as long as the BOD'S don't go bragging about record earnings to the street. Being the new kid on the block the BOD'S need to learn how to play the game with the money mogels to get the best for the shareholders. If not, we take action to oust them. But I have faith in them.

 

[otc]

I was hoping to retire next year but the lack of pop by the stock has made me rethink my plans. I guess I got cought up in the hype and had inflated expectations for the stock price. At least I didn't mortgage my house to buy into the IPO like one guy that I know did. He got in at over $60 and now he's totally stressed out.

 

[oplman]

xbrown,
Ten for one split!!!!

 

[fred]

My humble advice to OTC is to consult a financial planner before you take an "early retirement". If you are in the same boat as XBROWN with less than a MIL. you can kid yourself if you want too about having enough money to spend time with your family from here on out. But you won't. You'll wind up working again somewhere else and will be away from your family and still have stress, with alot less money. If your going to have to keep working...your best bet is to stay where you are. There are VERY FEW companies out there that offer the financial independance that WILL come to you in time. The grass always looks greener on the other side of the fence. Why leave U.P.S. to go work somewhere else ????? I stayed with U.P.S. and yes made sacrafices, however the rewards were worth it. I gave myself an early retiremnet, but have the $$$ so that I don't have to work ever again, if I hadn't, I would not have left. Think about what your about to do, then do the right thing.

 

[brownwife]

Moreluck, Thanks for the info. I'm learning as I go. With the husband working so many hours, it has fallen to me to get all the info. Thanks again.

 

[ex]

LIVING A GREAT LIFE AFTER UPS TOOK THE BUYOUT IN 95.BOUGHT STOCK WITH THE MONEY. NOW WORKING 6AM TO 2PM.HOME EVERY AFTERNOON TO SPEND TIME WITH MY FAMILY.I`AM IN MY LATE 30`S, WITH ENOUGH STOCK TO LIVE ON IF I HAD TO.THINK ABOUT IT . LIFE IS SHORT
THANK YOU,UPS FOR SEMI RETIREMENT BEFORE 40
PS. BUY AS MUCH STOCK AS YOU CAN.THEN HYPO AND BUY MORE.

 

[upsdowns9]

Hello Ex ELIUPS...we must know each other ...reach out on the username link ..

 

[exo]

Hi All,
I "retired" ten years ago at the ripe old age of 46 with sufficient funds in UPS stock and thought I would never have to work again. Boy, was I wrong!!! Not due to the money but my nature. The first year was great... I awoke each morning and went out and did something new. My wife worked because she liked her profession and half of our kids were still in school the other half working. I enjoyed the kids along with my wife on their time off. After a year or so, it started to get booring! I did some soul searching and decided to open a small business in my lifelong hobby. I have never been so happy. I have actually put in more total hours during many days in the last eight years than I did at UPS... BUT it was much more fun and very rewarding. One of my daughters now works for me and since the IPO I finally convinced my wife to retire. Believe it or not, her biggest fear was Health Insurance which she carried for us. We are carrying it under COBRA now and will figure out what we will do in 18 months. (She still worries about this a bit) I am now slowly backing out of the business and letting my daughter assume more and more responsibility. This will be my second try ar retirement but this time I will be able to ease into it. Again, $$$ is no problem. We just returned from Eastern Europe and in a few weeks we will be off to Western Europe. We will be taking a lot of time building a new home (lakefront) and then decide where else we want to travel. I guess I'll have to see how long retirement lasts this time.

Bottom line, make sure you have a plan. Where did I hear that before?

 

[magic]

Just a quick question: When you resign,
do you have to sell back your OPL??
Anyone know??