Forgive my bluntness here, but if you were surprised by the quarterly results that UPS
It's been more than a month since FedEx
UPS reported a $0.25-per-share profit for the fourth quarter of 2008 -- a reversal from last year's $2.52 loss. It also reported an $0.83-per-share "adjusted" profit -- a 22% decline from last year's number, which was similarly adjusted to back out one-time expenses.
Now, ordinarily, I'd spend the rest of this column discussing the validity of UPS' characterization of its earnings, debating “one-time” expenses, and UPS’ choice of non-GAAP metrics. But I won't. Because the real story here today is not how much UPS earned or didn't earn. Nor is it how well or poorly it's faring. There's no arguing with CEO Scott Davis' assertion that we're in the midst of a "severe decline in economic activity around the world."
What's important to investors, I believe, is the bigger picture -- the "tough decisions necessary to adapt our enterprise to today’s realities," as Davis put it.
What can't Brown do for you
"Tough decisions." That has a nice ring to it. But don't expect UPS employees to cheer Davis' intestinal fortitude. In an effort to ride out the storm, UPS yesterday joined such business luminaries as Ford
Granted, on the plus side, UPS at least took the high road by ensuring that if its workers must shiver through a 401(k) freeze, management will get a veritable case of frostbite. Taking a page from Motorola's
All totaled, consolidations, salary freezes, and benefit reductions will save the company more than $500 million per year. Big picture, though, I believe cutting employee retirement benefits won't quell the macroeconomic storm UPS is sailing through. All it will do is hurt the company's image among potential employees once the storm is past and UPS needs to expand again.