Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



FedEx's Strange Delivery

Nothing confuses me more than when a company puts gratuitous fluff into an otherwise solid press release. It's just plain annoying. Especially when a stalwart like Motley Fool Stock Advisor pick FedEx (NYSE: FDX  ) does it.

Allow me to explain. In a press release issued yesterday, FedEx said it would be raising shipping rates an average of 3.5% in 2006. It also said it would be rolling out new rates for those who use its retail locations. (FedEx owns Kinko's.)

The release said the price increase is a combination of an average 5.5% boost in its list rates, offset by a 2% reduction in its fuel surcharge. Sounds fair to me. So why, then, this quote?:

"This reflects our continued commitment to invest in our business in order to meet and exceed new customer expectations," said T. Michael Glenn, FedEx executive vice president, Market Development and Corporate Communications. "Enhancing our operations and services gives our customers greater ability to better manage their supply chains and improve their competitiveness."

So you're telling me a price increase will help your customers be more competitive? Yeah, OK, maybe in 10 years after you've fully reinvested the proceeds. But does that really matter today? Not really. Let's just please call this what it is -- a price increase.

Besides, the news should be that FedEx's willingness to raise prices in a highly competitive industry is indicative of a very strong business. Or one that's seen price competition from its main competitor, UPS (NYSE: UPS  ) , wane significantly. Either way, it's a good sign. And it gets better when you consider that FedEx just reported a 10% increase in sales and an expanding operating margin (after accounting for non-cash charges). That's pretty impressive, considering the macroeconomic conditions in which the company operates. Which is also what makes the idea of press release shenanigans -- intended or not -- all the more stupid.

As a former PR guy, I've written enough stinky press releases in my time to know that sometimes management gets overzealous. So let's chalk it up to misguided passion. Besides, the reality at FedEx isn't too bad.

Don't wait by your mailbox for the FedEx truck. We've got related Foolishness right here:

FedEx is a Motley Fool Stock Advisor pick. For a 30-day free trial to the best of Tom and David Gardner's picks, click here.

Fool contributor Tim Beyers uses regular old Priority Mail as much as possible. He's just cheap that way. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile here. The Motley Fool has an ironclad disclosure policy.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 496865, ~/Articles/ArticleHandler.aspx, 10/25/2016 10:01:06 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,211.52 -11.51 -0.06%
S&P 500 2,148.98 -2.35 -0.11%
NASD 5,308.24 -1.59 -0.03%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 9:44 AM
FDX $171.98 Down -0.10 -0.06%
FedEx CAPS Rating: ****
UPS $108.53 Up +0.08 +0.07%
United Parcel Serv… CAPS Rating: ****