NEW YORK (
Stephanie, one of your newer positions is FedEx. You like it for the longer term, but also for some near- and medium-term catalyst. What are those?
Yeah, a couple of things. First we get their analyst day this week, it's actually two days. I think you are going to hear a lot about their restructuring, which I think is very critical for the long-term story, and near-term I think you'll get a nice boost from it. Secondly, you have the holiday sales coming up, which is seasonally a very good time to own the stock. And third lower gas prices, lower oil prices, is also a benefit. It's certainly not baked into numbers because it's so volatile it can go right back up, but it certainly is a plus right now.
Now the one thing that you didn't mention was their international business- Europe, Asia. This is what we've heard from them, most recently, that they cut guidance because of the slow down mostly in Europe. Are you concerned about that? Is that risk baked into these numbers now?
Yeah, you know I think it is. It's about 30 percent of their total revenues. The stock is down five percent from when they announced disappointing earnings. So I think that a lot of that is already baked into the stock. And more importantly what they are going to do in this restructuring is focus more on ground and freight and less on express because in the slowdown in the global economies, here as well as abroad, people use less in terms of express because it costs too much. Right? So they are focusing more on the ground and the freight, which is something that UPS does very well, but FedEx hasn't really focused that much on it. So I think you are going to see that over time and that should be helpful to earnings.
How big could that shift look as the business shifts, and how fast can they get out of that once the economy does return?