Updated from 8:39 a.m. EDT


(FDX) - Get FedEx Corporation Report

disappointed investors Wednesday, reporting a net loss and projecting continued harsh economic conditions for the remainder of the year.

However, the overnight package carrier said the economy is improving and it forecast growth in the first half of calendar year 2010, partially due to reduced costs and better year-over-year comparisons. Additionally, after allowing for one-time items, the company topped analysts' estimates for its fiscal fourth quarter.

Nearing midsession, shares were trading down 2.8% at $50.


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shares were down 1.4% to $47.78.

On a conference call, CEO Fred Smith said "the worst of the recession is likely behind us,

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and we remain optimistic about a turnaround in calendar year 2009." Smith pointed to positive trends including moderating inventory-to-sales ratios, potentially leading to restocking, as well as improvements in equity and credit markets and in manufacturing, housing, global trade and consumer confidence numbers.

The company's fiscal fourth quarter, which ended May 31, reflected "a brutal economic environment," said CFO Alan Graf. Revenue fell by $2 billion, or 20%, because of lower volume, rate pressures, smaller packages and reduced fuel surcharges. Graf said fuel surcharges set in April and May were "a substantial drag on first-quarter earnings,

which, if they stay where they are, should balance out in the rest of the year." The surcharges are set monthly and failed to capture the impact of the recent run-up in oil prices.

In a prepared statement released before the market opened, Graf said "the operating environment for our first two quarters in fiscal 2010 is expected to be extremely difficult. Manufacturing activity is expected to be substantially negative year over year through the summer and last year's first-quarter results benefited from stronger economic activity, making earnings comparisons difficult."

During the fiscal fourth quarter, excluding one-time items, FedEx earned 64 cents a share. Analysts surveyed by Thomson Reuters had estimated a profit of 51 cents. Revenue was $7.85 billion. Analysts had estimated $8.3 billion in revenue.

Including one-time charges, the company posted a net loss of $876 million, or $2.82 a share. The charges of $3.46 a share related primarily to impairment of goodwill related to acquisitions of Kinko's and Watkins Motor Lines and reflected a decline in the current fair value of the two companies, FedEx said. Additional charges involved personnel reductions and facilities downsizing.

In the same quarter a year earlier, excluding charges, FedEx earned $1.45 a share.

FedEx said it expects earnings of 30 cents to 45 cents in the first fiscal quarter of 2010. Analysts had been estimating 68 cents. In the same quarter a year earlier, the company earned $1.23 a share.

In a research report, Standard & Poor's analyst Jim Corridore reiterated a buy on FedEx shares, saying the company beat his estimate, and he predicted "a likely investor rotation into logistics stocks if

the economy starts to improve." However, Corridore reduced his 12-month price target to $62 from $71 and his fiscal year 2010 estimate to $2.40 from $3.90.