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<blockquote data-quote="Ricochet1a" data-source="post: 1168167" data-attributes="member: 22880"><p>The Chinese are into manufacturing, resource extraction (oil, minerals - to keep their economy running), and then real estate outside of China. They've got BILLIONS in US dollars they have to do something with, so they purchase assets outside China with those BILLIONS, looking to get financial returns higher than if they placed those funds with Western banks. They've taken to capitalism quite nicely. </p><p></p><p>Service industries (FedEx is a service industry), isn't something that they'd be interested in. </p><p></p><p>FedEx (at least Express) has financials which mirror airlines VERY closely. Traditionally, airlines are MONEY PITS - they are unprofitable. Costs of equipment, fuel and labor are too high while there is too much pressure on revenues. This is what killed Express back in the mid-90s, UPS got into the overnight market in a big way, so the days of Express charging what it wanted went away - and so did its profits. Then the gross mismanagement (operating as if Express was still in a market monopoly), slowly strangled FedEx and the wage employees' compensation was seen as a method of keeping the 'boat afloat'. Fast forward 15 years...</p><p></p><p>This is why most airlines have some form of government subsidy (in most countries) to keep them in operation. Even in the US - the costs of air traffic control and airport operation are greatly subsidized by federal and even some state governments. If the airlines truly had to 'pay their own way', they'd have to charge so much that the industry would collapse and utilization of other methods (over the road primarily - potentially rail if the government REALLY got out).</p><p></p><p>No, FedEx is looking to make its investors happy (the current management is on borrowed time when it comes to that though, a very large percentage of FedEx is owned by institutional investors, and Fred has lost his 'magic' in the past decade). I think upper management all want to ensure they still have a job, and to build the value of their own portfolio should they need to get out in a hurry. Right now, the upper execs aren't 'dumping' stock, they are exercising stock options - they are looking to increase the value of that stock so they can turn around and sell those shares (when able) at a large difference in price between what they paid and what they anticipate to receive.</p></blockquote><p></p>
[QUOTE="Ricochet1a, post: 1168167, member: 22880"] The Chinese are into manufacturing, resource extraction (oil, minerals - to keep their economy running), and then real estate outside of China. They've got BILLIONS in US dollars they have to do something with, so they purchase assets outside China with those BILLIONS, looking to get financial returns higher than if they placed those funds with Western banks. They've taken to capitalism quite nicely. Service industries (FedEx is a service industry), isn't something that they'd be interested in. FedEx (at least Express) has financials which mirror airlines VERY closely. Traditionally, airlines are MONEY PITS - they are unprofitable. Costs of equipment, fuel and labor are too high while there is too much pressure on revenues. This is what killed Express back in the mid-90s, UPS got into the overnight market in a big way, so the days of Express charging what it wanted went away - and so did its profits. Then the gross mismanagement (operating as if Express was still in a market monopoly), slowly strangled FedEx and the wage employees' compensation was seen as a method of keeping the 'boat afloat'. Fast forward 15 years... This is why most airlines have some form of government subsidy (in most countries) to keep them in operation. Even in the US - the costs of air traffic control and airport operation are greatly subsidized by federal and even some state governments. If the airlines truly had to 'pay their own way', they'd have to charge so much that the industry would collapse and utilization of other methods (over the road primarily - potentially rail if the government REALLY got out). No, FedEx is looking to make its investors happy (the current management is on borrowed time when it comes to that though, a very large percentage of FedEx is owned by institutional investors, and Fred has lost his 'magic' in the past decade). I think upper management all want to ensure they still have a job, and to build the value of their own portfolio should they need to get out in a hurry. Right now, the upper execs aren't 'dumping' stock, they are exercising stock options - they are looking to increase the value of that stock so they can turn around and sell those shares (when able) at a large difference in price between what they paid and what they anticipate to receive. [/QUOTE]
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