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UPS Lowers 2Q Earnings Expectations
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<blockquote data-quote="moreluck" data-source="post: 365271" data-attributes="member: 1246"><p><span style="color: sienna">copy of a response letter from the CFO when a concern was expressed about the low stock value..........</span></p><p> </p><p>Scott mentioned that you had inquired as to our buyback activity and that </p><p>there was some nervousness among our retirees about what is going on with the </p><p>stock. I offered to send you a quick update. Feel free to share this </p><p>information openly. </p><p> </p><p>I know that this is a tough time for the markets and now for UPS stock also. We did have to revise our earnings outlook for the 2nd quarter significantly </p><p>below the previous numbers that we gave earlier. The stock reacted strongly, </p><p>probably in part due to the fact that FDX lowered their longer term guidance </p><p>dramatically the previous week. At this point we have not commented beyond </p><p>this quarter. We have certainly seen slow economies before and in some cases </p><p>UPS earnings have declined, but as a public company it does now create a level </p><p>of price volatility that we did not see when we were public. </p><p>Although the current environment of sky high fuel and weak demand are </p><p>causing disappointing results, we remain confident in the long term prospects for </p><p>UPS. The company is healthy financially, DHL is retreating from the US </p><p>market, and FDX is struggling to defend their Ind. Contractor model. In addition, </p><p>the Intl business continues to grow and our Supply Chain and Freight unit is </p><p>starting to show real progress. All in all, I think that the market is </p><p>overreacting and that UPS is undervalued today . As a fellow deep investor in the </p><p>company, I am happy to have most of my "eggs" in this solid basket. </p><p>As to our buyback activity, we did commit in January to buying back $10 </p><p>Billion of UPS stock over the course of '08 and '09 as part of our new financial </p><p>leverage policy. As of the end of Q1 we had bought back $1.25B of stock - </p><p>pretty much right on the average pace needed to get done in our timeframe. Due to </p><p>the large quantity that we are buying, we intend to be relatively consistent </p><p>buyers of the stock on an ongoing basis and are in the market on a frequent </p><p>basis. We also intend to be somewhat opportunistic and do have the ability to </p><p>buy more shares on those days that the stock is weak and the market puts UPS </p><p>shares "on sale". You should realize however that, unlike the 1st few years </p><p>after we went public, the number of shares that UPS can buy has little impact </p><p>on the daily price behavior. The stock is now much more "liquid" and trading </p><p>volume on a busy day reaches 8-10 million shares, some 10 times the volumes </p><p>of the past. </p><p>Regards, Kurt </p><p> </p><p> </p><p>Kurt Kuehn </p><p>Chief Financial Officer </p><p>UPS </p><p>55 Glenlake Pkwy </p><p>Atlanta, GA 30328 </p><p>404-828-6977 </p><p>404-828-6619 (Fax)</p></blockquote><p></p>
[QUOTE="moreluck, post: 365271, member: 1246"] [COLOR=sienna]copy of a response letter from the CFO when a concern was expressed about the low stock value..........[/COLOR] Scott mentioned that you had inquired as to our buyback activity and that there was some nervousness among our retirees about what is going on with the stock. I offered to send you a quick update. Feel free to share this information openly. I know that this is a tough time for the markets and now for UPS stock also. We did have to revise our earnings outlook for the 2nd quarter significantly below the previous numbers that we gave earlier. The stock reacted strongly, probably in part due to the fact that FDX lowered their longer term guidance dramatically the previous week. At this point we have not commented beyond this quarter. We have certainly seen slow economies before and in some cases UPS earnings have declined, but as a public company it does now create a level of price volatility that we did not see when we were public. Although the current environment of sky high fuel and weak demand are causing disappointing results, we remain confident in the long term prospects for UPS. The company is healthy financially, DHL is retreating from the US market, and FDX is struggling to defend their Ind. Contractor model. In addition, the Intl business continues to grow and our Supply Chain and Freight unit is starting to show real progress. All in all, I think that the market is overreacting and that UPS is undervalued today . As a fellow deep investor in the company, I am happy to have most of my "eggs" in this solid basket. As to our buyback activity, we did commit in January to buying back $10 Billion of UPS stock over the course of '08 and '09 as part of our new financial leverage policy. As of the end of Q1 we had bought back $1.25B of stock - pretty much right on the average pace needed to get done in our timeframe. Due to the large quantity that we are buying, we intend to be relatively consistent buyers of the stock on an ongoing basis and are in the market on a frequent basis. We also intend to be somewhat opportunistic and do have the ability to buy more shares on those days that the stock is weak and the market puts UPS shares "on sale". You should realize however that, unlike the 1st few years after we went public, the number of shares that UPS can buy has little impact on the daily price behavior. The stock is now much more "liquid" and trading volume on a busy day reaches 8-10 million shares, some 10 times the volumes of the past. Regards, Kurt Kurt Kuehn Chief Financial Officer UPS 55 Glenlake Pkwy Atlanta, GA 30328 404-828-6977 404-828-6619 (Fax) [/QUOTE]
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