Shares of

Yellow Roadway

( YELL) tumbled after the trucking company disclosed a fourth-quarter loss and operating earnings that fell short of estimates.

The Overland Park, Kan.-based company had a loss of $672,000, or 2 cents a share, including the costs associated with acquiring

Roadway

, which was

first announced in July and closed on Dec. 11. The company earned $14.2 million, or 48 cents a share, a year earlier.

On an adjusted basis, operating income rose 35% to $21.4 million, or 71 cents a share, from $14.8 million, or 50 cents a share in the year-earlier quarter. Analysts, however, were calling for 78 cents a share.

Revenue, excluding Roadway revenue since the date of acquisition, was $762 million, up 6.4%, from $717 million in the fourth quarter last year. Including revenue from the Roadway acquisition, consolidated revenue for the fourth quarter was $903 million. Yellow cited increased business volumes, effective yield management, and growth in premium services.

Bear Stearns analyst Eric Wolfe called Yellow's quarterly report "messy," mostly because its merger with Roadway occurred with 13 days left in the quarter. "The report is a mess and difficult to interpret," Wolfe wrote in a research note. "Generally, however, Yellow's report was a modest miss and Roadway's a major one."

The analyst said Yellow's standalone corporate on-going operating income was up 39% year over year at $34.2 million on a revenue increase of 4.3%. Roadway, however, had operating income of $17 million, down 69% from a year ago on an 11.8% drop in revenue.

Jason Seidl, an analyst with Avnodale Partners, said the company's revenue growth is lagging non-union peers

Old Dominion

(ODFL) - Get Report

and

Con-Ways

( CNF), both of which posted double-digit revenue increases.

Concerning the stock's price, Wolfe thinks it will stay in the low $30 range, "until management produces results, which could easily occur as early as the first quarter."

Shares of Yellow were lately off $5.17 at $31.24 in Friday trading.

At Roadway Express, total tonnage per day in fourth quarter 2003 was down 6.4%, primarily due to the difficult comparison to fourth quarter 2002, the company said.

The company was optimistic on the economy, however. "We experienced slightly improving economic conditions during the fourth quarter," it said in a statement.

Looking to the first quarter of 2004, Yellow sees earnings of 25 cents to 35 cents a share. Consensus is 35 cents a share.

Wolfe sees operating leverage at the company, especially if the economy improves, and expects potential upside to the company's first-quarter guidance. Still, problems with Roadway are possibly greater than anticipated.

"Our guess is Yellow management will be able to make some headway into improving this situation into an improving economy, tight capacity and better visibility and yield management systems," he said. (Bear Stearns makes a market in Yellow's securities.)

But J.P. Morgan analyst Gregory Burns is concerned that Roadway's results could pull down the consolidated results of the newly merged company. "While we are confident that Yellow Transportation can achieve solid earnings growth in 2004, a struggling Roadway Express unit could pressure consolidated earnings growth," he wrote in a research note. (J.P. Morgan makes a market in Yellow's securities.)

For full-year 2004, Yellow reaffirmed its previous profit forecast for $2.70 and $3.30 a share on an expected $6.5 billion in revenue, assuming an economic growth rate of 4%. Wall Street consensus is $3.08 a share.