| Deutsche Post, DHL and the
YRC Rumor Mill |
| Only Fact Available is Rumors
Drive Up YRC Stock Price. |
| From the RD
News Desk |
| 44.17 -1.50:
Less-than-truckload freight carrier YRC Worldwide Inc. indicated
late Thursday that it's headed in the right direction with its
fourth quarter earnings. It reported earnings of $1.02 per share
in the latest period, excluding non-recurring items, $0.02
better than consensus. Revenues fell 3.0% year over year to
$2.41 bln versus consensus of $2.4 bln. YRCW also issued upside
guidance, but a wide range caused some to lock in profits. |
| Rumors that
Deutsche Post, which owns DHL, would buy YRCW have boosted
YRCW's stock somewhat in recent days. |
| URL Source: http://news.moneycentral.msn.com |
| I am long YRCW. I
have no difficulty understanding why YRCW would be an attractive
acquisition candidate. Because I think the long term upside is
extremely high with YRCW, I hope a transaction doesn't happen. |
| URL Source: http://messages.finance.yahoo.com/Stocks |
|
|
| Of the rumor reports at the message
boards, the most aggressive statements appear to come from someone next
to the "Ivory Tower" as it is sometimes referred to at YRC.
Here is the posting: |
|
Bill Zollars's specialty is
that he puts the carrot out there for the analysts.
In this case the carrot is 2007 earnings of $4.70 - $4.90.
Well, you heard it here first. They have no chance of hitting
that estimate unless they fool around with the accounting.
1) Fuel surcharge revenue (which is all profit) will decline
sharply in 2007 if fuel prices remain at these levels. This
fuel surcharge revenue may represent 12-16% of their total
profit.
2) They created another level of (expensive) administration
and bureaucracy with their new concept of YRC National
Transportation. Now, the company may eventually get some
benefit from this but any benefit almost certainly will not
come in the 1st two quarters.
3) They may take some cost out of the Regional Group with the
Bestway/Reddaway merger but Bestway was operating badly and
getting worse. There is a lot of work to do to turn the
momentum positive in that situation.
4) Revenue seems to be very weak at Holland, New Penn and most
significantly Yellow. No revenue will be a big profit problem.
5) Folks....THIS IS A CONTRACT YEAR....Negotiations will soon
begin on a new National Master Freight Agreement. This
agreement will expire in March 2008 but the talk and the
posturing will begin long before that.
P.S. It is not in the best interest of the company to make a
TON of money during a contract year.
Now these are five legitimate reasons why YRCW won't come
close to making earnings in 2007. All of this said, if the
economy come roaring back then I guess I'll be wrong. But,
until that happens I'll be betting that YRCW doesn't make the
number that Billy boy just put out there.
|
| http://messages.finance.yahoo.com/ |
|
The bottom line is the price of the
stock has maintained a high price after the fourth quarter report.
Rumors or not, as of the closing bell on Friday, February 9th, 2007, YRC
shares traded at 43.39 
0.06 (0.14%). |
| At the time of this writing, no press release has been published from
YRC
Worldwide, DHL or the
Deutsche Post
regarding acquisition.
|
