Transportation stocks
Interview: JP Morgan Securities---Burns, Greg---Analyst
>> welcome back. don’t look for paychecks to make a play for software maker in any time soon. the company’s c.f.o. john murphy tells bloomberg it has no plans to make a bid for intuit.
>> companies that have clients in the 30 to 50,000 range, there aren’t very many of those left. intuit is the only one in that space. we’ve seen this consolidation and there isn’t too much left that’s sizable.
>> you recall paychex bought fleetboston’s interplay unit in april and it also bought advantage payroll services in september for $240 million. well, apple computer is introducing a faster line of desktop computers to counter a drop in sales of its power mac machines. the latest power mac models use a 64 bit processor. steve job calls the machine’s the world’s fastest p.c.’s. the new models are priced from $1,999, to $2,999. apples says the drop in power mac sales stems from a sluggish global economy that has discouraged advertising agencies and graphic designers from buying new equipment. they blame the lower sales on the perception power mac’s are too slow. companies bullish on their own stocks are doing more than borrowing by issuing convertible bonds. they are protecting investors by buying call spread options. convertibles can be good for the company and bond buyers because the debt is repaid with stock , not cash. it deluts the shares of stock already held. cyprus semiconductor and navistar international are spending as much as 16% of their convertible proceeds on stock options. the nation’s biggest bookstore chains have been setting sales records and exceeding expectations, the fifth installment of the harry potter series. the order of the phoenix went on sale at 12:0 1:00 a.m. saturday morning. scholastic says about 5 million copies were sold in its first 24 hours. barnes & noble sold 286,000 copies in an hour. that’s 80 books per second. the bookstore chain also sold another 600,000 by sunday afternoon. amazon.com got orders for more than 1.3 million copies. the online retailer’s biggest release ever. borders group sold about 750,000 copies in the first day. that was that company’s highest first day sales of any title. well, earnings for the transportation shipping company federal express are out tomorrow and are next guest is bullish on fed ex’s earnings and stock , though he’s less positive about the shipping and transportation industries. he is greg burns, senior transportation analysts at j.p. morgan securities joining us from this firm in norchblth thanks for being on the program.
>> hi, thanks for having me. let’s begin with the estimate of 93 cents, your estimate of 93 cents per share for the company. the consensus, you are a little more bullish on federal express than most analysts. why is that? that’s right. we think there are a couple of factors helping them out in the quarter. we think the weak dollar will help give them currency benefits from their overseas operations. we also think that their fuel surcharge which is actually going to be higher this quarter than it was last quarter, even as fuel has dropped. the combination of the way the surcharge works with a little drop sequentially in fuel and currency benefits, combined with you know, continued strong gains in the ground business should make for a pretty good quarter.
>> yet we are seeing a number of companies coming out with earnings forecasts that are lower than their previous forecasts for the second quarter. tenet healthcare today. last week we had everyone from eastman kodak to tupperware came out and lowered their earnings forecast. this doesn’t affect fed ex.
>> i can’t speak to the other industries. i would certainly agree the economy is flat. all our sources, we’ve seen a few preannouncements in transportation, not a lot, we’ve definitely seen a few. all our sources say the economy is flat as a pancake, and so there is not a rising tied lifting all boats. so i would agree with the view that, you know, fed ex management will likely say that the economy is really going nowhere. i would expect them to say something like that.
>> why are fed ex’s prospects better than u.p.s..
>> long-term we like u.p.s.
