US Freightways Cuts Spending, Workforce

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Friday March 9, 9:55 am Eastern Time USFreightways Cuts Spending, Workforce CHICAGO (Reuters) - USFreightways Corp. (Nasdaq:USFC - news) said on Friday it expects first-quarter results to fall ``very substantially'' below estimates, and it has reduced spending and cut an unspecified number of jobs as the U.S. economy's woes hit the trucking industry hard.

The company's shares plummeted $5-5/16, or more than 15 percent, to $28-7/8 in early trade on Nasdaq. The stock's 52-week range is $18-7/8 to $47-5/16.

The company, one of the nation's leading regional transporters of loads smaller than 10,000 pounds, said it is unlikely to see any significant improvement in March after an accelerated slowdown in the past two months. Freight demands will continue to soften, it said. Bad weather has also led to higher costs and decreased efficiencies, the company added.

Analysts surveyed by research firm First Call/Thomson Financial expect the company to earn 66 cents a share in the first quarter, 25 percent below the 88 cents a share it posted in the first quarter a year earlier.

``Expectations at each operating company have been affected, some more than others,'' said Samuel Skinner, USFreightways' chairman, president and chief executive.

USFreightways said it has taken steps, starting in the fourth quarter and continuing in the first quarter, to increase cost efficiencies, including a ``substantial'' reduction in capital spending and cuts in its labor force.

The company also said progress in rebuilding its freight forwarding operation, planned as a two-year program, will be impeded by the slowing economy.

PERSONAL NOTE: Why did I post this article? Here is a small puzzle piece that denotes one of the largest U.S. shippers that reports, "it is unlikely to see any significant improvement in March after an accelerated slowdown in the past two months. Freight demands will continue to soften." Emphasis should be on ACCELERATED.

That being the case, I don't foresee any improvement in the stock markets this year. As long as shipments are on the decline, that means less orders, that means less business for all the companies making the orders, less sales, less profit, in other words the economy continues to decline DESPITE todays unemployment report that said layoffs are stable. January 4.2%, February 4.2%

I'll trust US Freightways report of less business and declining revenue over our unemployment report any day of the week. This is what I mean about connecting the dots and putting the puzzle pieces together. Anybody have any comments on this?

-- Guy Daley (guydaley@altavista.com), March 09, 2001

Answers

<< Anybody have any comments on this? >>

Only to agree with your analysis.

It must be admitted that the trucking company executive is merely making a prediction...but who are we going to believe? When a prediction of how the economy will go involves high-visibility personalities, caution or outright optimism is the name of the game. When the prediction involves real business decisions, with the legal niceties of alerting shareholders to adverse conditions affecting a publicly traded company, well...we get a negative reading of the tea leaves.

That's what is so remarkable about the cautiously negative statements from the new U.S. administration. Both Bush and Cheney have said, uh oh, maybe the future isn't so bright, and they get slammed by other politicos and by the media talking heads for daring to hint at the obvious.

In a simialr vein, note the other stories here about a senior Japanese politician's admission that the economy there is in bad shape: the news story isn't that this is a blinding flash of the obvious, rather the news story is that a politician dared to speak the truth. And now the rest of the Japanese government is running around trying to "spin" his statement.

-- Andre Weltman (aweltman@state.pa.us), March 09, 2001.


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