UPS profit rises 37%, but shares fall $5.4375

Investors expected bigger boost from holiday Net boom

Delivery industry

February 01, 2000|By BLOOMBERG NEWS

ATLANTA -- United Parcel Service Inc. said yesterday that its fourth-quarter earnings rose 37 percent, disappointing investors who expected the world's largest package delivery company to get a bigger boost from holiday shipments by online retailers.

UPS shares fell $5.4375, or 8.4 percent, to $59.50 on the New York Stock Exchange. It was the lowest close since the shares were issued at $50 in a Nov. 9 initial public offering. Some investors had expected UPS to do better than the 5.6 percent increase in fourth-quarter package volume worldwide from a year earlier.

"Given the supposed strength in e-commerce this past holiday season, some investors were hoping for more rapid growth" in that area, said Anthony Gallo, a Deutsche Bank Alex. Brown analyst.

UPS net income rose to $661 million, or 56 cents a share, from $482 million, or 43 cents, a year earlier. Revenue rose 12 percent to $7.45 billion. It was the Atlanta-based company's first earnings report since its $5.47 billion IPO.

Investors expected greater growth in U.S. shipments on reports that Christmas-season sales on the Internet more than doubled to $7 billion, analysts said.

The fourth-quarter results were in line with the 55-cent average forecast of analysts polled by First Call/Thomson Financial. Some analysts were pleased with the performance.

"Given the rising fuel [price] environment, this is pretty im pressive," said Peter Coleman, a Banc of America Securities analyst with a "buy" rating on UPS. "The most impressive number is the next-day air product, in which they showed volume growth over 10 percent."

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