FedEx Slashes 2009 Profit Target

Shares of the package carrier fall nearly 8%.
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Shares of

FedEx

(FDX) - Get Report

slid in late trading Monday after the package carrier said the sluggish economy has forced it to cut its expected earnings for fiscal 2009.

The Memphis-based company is now predicting earnings of $3.50 to $4.75 a share for the fiscal year, down from its previous guidance of $4.75 to $5.25. FedEx said in a press release that "significantly weaker macroeconomic conditions are expected to offset the benefits from lower fuel prices and the announced departure of DHL from the U.S. domestic package market."

FedEx's near-term outlook was better, with the company saying it should earn $1.58 a share for the second quarter ended Nov. 30. The prior projection was for a profit of $1.40 to $1.60 a share. Analysts are looking for earnings of $1.54 for the second quarter and $5.15 for the fiscal year that ends in the spring.

"Second-quarter results benefited from rapidly declining fuel prices and continued cost management," said Alan B. Graf Jr., executive vice president and chief financial officer, in a prepared statement. "However, demand for our services weakened sequentially throughout the quarter and global economic trends continue to worsen, substantially reducing our second-half outlook."

The company said it would alter its expense plans to reflect the struggling economy. Now, FedEx is targeting capital spending of $2.5 billion for fiscal 2009, down from $3 billion at the beginning of the year.

Shares of FedEx rose 72 cents, or 1%, to $74.43 in regular trading. However, in the after-hours market, the stock slumped nearly 8% to $68.65. Competitor

UPS

(UPS) - Get Report

was down 3.6%.

This article was written by a staff member of TheStreet.com.