A trade on FedEx's disappointing outlook, with Tim Seymour, Triogem Asset Management.
By NBC News staff
Package delivery company FedEx sent a shudder through the market Tuesday, cutting its fiscal 2013 profit target and saying earnings could slide as much as 6 percent this year.
A weakening world economy is leading customers to shift toward lower-priced and slower shipping options, the company said. Its share price slid on the news.
Offering some insight into the challenges businesses are facing, FedEx said makers of electronics and mobile phones are opting to ship their products via sea instead of by air freight to save costs.
?You can?t have jet fuel going up to close to $4 a gallon on occasion without it having a big effect on the choices people make,? FedEx?s Chief Executive Officer Fred Smith told investors on a conference call.
A global shipper of products for businesses and consumers, FedEx has its finger on the pulse of the economy and is a ?leading indicator,? Tim Seymour, a managing partner at Triogem Asset Management, told CNBC.
On Sept. 4, FedEx said weakness in the global economy constrained revenue growth during the first quarter.
The company said Tuesday it now plans to take ?further actions to reduce costs.? The company did not offer details, but promised an update at an October investor meeting, noting that it does not plan to cut staff.
Reuters contributed to this report.
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