After initially plummeting on an anemic earnings report yesterday, FedEx (NYSE: FDX) shares rebounded to end the day notching a 2% gain. Fast-forward fewer than 24 hours, though, and FedEx has already given back yesterday's winnings as investors think, rethink, and re-rethink what the report actually told them. So which is it, Fools? Should FedEx fly, or did it fumble its fiscal Q2 2011 earnings report?

Well, let's see here. Right off the bat, earnings dropped 19% year over year, ending at $0.89 for the quarter. That's clearly bad news. Last quarter, as you may recall, FedEx warned us that it wouldn't hit the $1.36-per-share target that Wall Street had set for it. It might earn $1.25. It could earn as little as $0.97 per share.

Now that we've opened the actual earnings package, though, we now know that all three of those guesses were wildly optimistic, and way off the mark. Despite enjoying "solid demand for our transportation solutions, outstanding customer service from FedEx team members, and a healthier global economy," as CEO Fred Smith put it, FedEx wasn't able to send the ball across the goal line. Instead, charges taken against potential legal liabilities, combined with the costs of reorganizing the FedEx Freight business to better compete with LTL shippers Arkansas Best (Nasdaq: ABFS), Con-way (NYSE: CNW), and YRC Worldwide (Nasdaq: YRCW) (not to mention UPS (NYSE: UPS)), cost FedEx $0.27 per share -- and even had they not, FedEx still would have missed its promised midpoint guidance of $1.25.

But wait! It gets better!
But let bygones be bygones, FedEx tells us. Next quarter's gonna be boffo. Now that all these niggling "one-time charges" are behind it, the company promises to turn things around in Q3, then go on to close out the year with anywhere from $5.00 to $5.30 in profits per share -- numbers better than it thought it could achieve just three months ago.

Of course, this depends on "stable fuel prices and continued moderate growth in the global economy" happening -- a strange precondition, given that economic growth can be expected to cause oil demand, and fuel prices, to rise. Despite getting the second half of its wish last quarter, CFO Alan Graf noted that when FedEx was surprised by "higher fuel prices than our earnings guidance had assumed" in Q2, that contributed to the earnings miss.

In short, when FedEx tells you it expects "margins to improve in the second half of fiscal 2011 and in fiscal 2012," be aware that there's a certain element of wishful thinking in that expectation.

Fool contributor Rich Smith has no position in any stocks named above, but FedEx is a Motley Fool Stock Advisor recommendation, United Parcel Service is a Motley Fool Income Investor pick, and the Fool owns shares of them both. The Motley Fool has a disclosure policy.

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