United Parcel Service
Pure Speculation on My Part

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By FrankllinTN
June 29, 2004

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I have read post with inferring comments or assumptions from time to time that with the past and current rise of FDX stock price, UPS is being pulled along with them. To a very limited extent this presumption could hold a valid point of conjecture. Do I believe it to be true in most instances � no. There is beginning to become a mirror image of delivery services competing on more or less equal foundations (minus the union [impediments] of UPS). The first team, FDX (the darlings) has been established on Wall Street for many a year and has always shown to be a growth engine, because UPS numbers were more or less in-house on comparisons. UPS initial IPO was compared to FDX as a speculation of that same type growth company. The change in attitude came about with the downturn of the market of 99' and the economy tanking with 9-11. Also added were a little union action to enhance some fears from past experiences.

Why so many shorts on UPS? Pure speculation on my part would advocate that traders see the growth of FDX as taking from UPS. It's funny and sad that these traders and analysis never put those percents to the test and see the total picture.

We, the insiders of UPS for many years knew our 3% increase in financial element of volume, revenue, margins, etc would require FDX to meet and exceed major hurdles to meet those same "totals" and not percents. As I've stated in the past a 1% UPS gain would require FDX to be 20% better to be equal. At that point there is a loss of volume or revenue, but that has not been the case. There are more elements in the comparison to admit there are some apple-to-apple comparisons and FDX is making gains or is better than UPS. Bottom line I read the numbers as black and white and not gray maybes'.

When the battle starts with DHL, whom do they go after first if you are DHL. Do you take on the big gorilla or the little chimp? To win the war you fight the battle you can win if you got big guns and dollars for ammunition. With two giants going after FDX I hope they have a big foxhole. Their debt load that will increase with rising interest rates (et al Kinko's to name reference a few) will be just another thorn to fester if earnings are diverted to battle the giants.

I do not wish or want UPS stock price to rise beyond its merits or future expectations on speculation that is not supported by firm financials. With a current P/E in the mid 20's it is well priced. To get to $80 a share by the end of the year we need to earn it. Every time FDX goes through their crazy gyrations of up 2 down 3 or up 3 down 1 on a day-to-day basis I fear for those being played in this market atmosphere. One miss step in a future report period and FDX will sink to the bottom of the tank for another ride to the top. One miss step by UPS will cost us, but by being solid as our past foundation will be short lived.

As some of you who have read my post in the past I more or less sit back and only editorialize when I reach a point of frustration in my basic understandings. I speculate as do many others, but at least I try to do the due diligence and make an interpretation of what I derived in that analysis. Lotus or Excel do wonders for one's understanding when you see things side by side and pull the true number together. So easy, yet blind to most. Oh well follow the herd.

As before � just sounding off and getting it off my chest. It's all my hot air.

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