Finances

FedEx Corp. (FDX) reported its second quarter revenues and earnings this past week. Over the quarter, the company reported solid earnings and reconfirmed its Fiscal Year 2012 earnings projections of $6.25 to $6.75 per share.

For the quarter, FedEx reported earnings of $1.57 per share. The company also reported quarterly revenue of $10.59 billion, a 10% increase from the same period last year. Additionally, the company reported net income of $497 million, a 76% increase over the $283 million reported a year ago.

"Our improved performance was largely a result of effective yield management programs and strong demand for FedEx Home Delivery and FedEx SmartPost services," said FedEx's Chairman, President and Chief Executive Officer Frederick W. Smith. "With the healthy growth in online shopping this holiday season, demand is increasing for these residential delivery services."

For the third quarter, the company is projecting earnings of $1.25 to $1.45 per share. This compares favorably to the previous year's third quarter earnings per share of $0.73.

FedEx also announced it had entered into an agreement to modernize its delivery aircraft fleet with the purchase of 27 Boeing 767-300s over the remainder of the decade, primarily to replace its older MD-10 airplanes. FedEx's David J. Bronczek projected the 767s would lower the company's operating costs by 23% per trip due to 30% better fuel efficiency.

FedEx Corp. (FDX) closed the week at $84.89; Boeing Co. (BA) closed at $71.01.

Best Buy's Earnings Fall Sharply as Consumers Look for Best Prices

Electronics retailer Best Buy Co., Inc. (BBY) reported its third quarter earnings last week. The company's profits fell 29% amid stiff competition from Amazon.com, Inc. (AMZN) and Wal-Mart Stores, Inc. (WMT).

For the quarter, the company reported net earnings of $154 million, compared to $217 million for the prior-year period. On an earnings per share basis, Best Buy earned $0.42 per share compared to $0.54 during the same period last year.

"Consumers have been value-conscious," Best Buy's CEO Brian Dunn said on a conference call. "We purposely planned to take a leadership stance in the marketplace and stepped up our promotional efforts to do so." In a separate statement, Dunn stated Best Buy had taken "actions to provide value to customers" in the face of a "competitive consumer environment."

Best Buy faces challenges this holiday season. According to analysts, Best Buy will have a difficult time maintaining profit levels as they fight against new competitors for market share. The company counters by saying it can effectively compete with its online rivals by offering customer support and services like in-store pickup.

Retailers Best Buy Co., Inc. (BBY) closed the week at $23.19; Amazon.com, Inc. (AMZN) closed at $181.26; while Wal-Mart Stores, Inc. (WMT) closed at $58.26.

RiteAid Makes Right Moves to Narrow Losses

The United States' third largest drug store chain, Rite Aid Corp. (RAD), reported its third-quarter results this past week. The company again reported quarterly losses but the company's outlook improved as a result of narrower losses.

For the quarter, Rite Aid reported net losses of $0.06 per share, down from $0.09 per share in the same quarter last year. Rite Aid reported net losses of $52 million, down from $79.1 million in Q3-2011. The company's revenues also improved by 1.8% over last year's third quarter, rising to $6.3 billion from $6.2 billion.

"We remain pleased," said John Standley, Rite Aid's President and CEO, "Our pharmacy sales growth was strong this quarter, with key drivers being our well-planned and executed flu immunization program and continued favorable customer response to our wellness+ loyalty program."

Rite Aid reported that it had delivered twice as many flu shots this year than it had last year and that the company was on pace to administer 1.5 million immunizations this season. More than 47 million people are enrolled in the pharmacy's wellness+ program.

Rite Aid's losses are largely attributed to the company's 2007 acquisition of two smaller pharmacy companies – Brooks and Eckerd. These acquisitions, which were debt financed, occurred right before American consumers reduced their spending.

Shares of Rite Aid Corp. (RAD) closed the week at $1.22.

The Dow started the week at 12,184 and closed at 11,866. The S&P 500 started the week at 1,255 and ended at 1,220. The NASDAQ started the week at 2,646 and finished at 2,555.

With increased signs that the U.S. economy is gaining strength, 10-year U.S. Treasury notes declined. The decline signals concerns are easing over whether the European debt crisis is acting as a drag on America's economic growth.

Some analysts view the interest in Treasuries as a sign the U.S. is viewed as a safer place to invest in the face of uncertainty over the European debt crisis. "The U.S. has attractions as a haven, so Treasury yields will continue to be weighed down," said a strategist with the Japanese unit of the Royal Bank of Scotland. At least one analyst, Russ Koesterich of BlackRock, is predicting a "modest [economic] contraction" in Europe spanning the next couple of quarters.

The United States Department of Treasury is scheduled to sell $35 billion of two-year notes on December 19, an equal amount of five-years on December 20, followed on December 21 with a sale of $29 billion of seven-year debt.

The 10-year Treasury note yield finished the week at 1.85%, down from 2.065% at the end of the previous week while 30-year Treasuries yield finished the week at 2.85%, compared to 3.11% at last week's close.

On December 15, 2011, Freddie Mac released its Primary Mortgage Market Survey (PMMS). For the seventh week in a row, mortgage rates have remained near historic lows.

The PMMS reported that the 30-year fixed rate mortgage (FRM) averaged 3.94%, down from last week's average of 3.99%. The FRM of 3.94% ties an all-time record low for the 30-year fixed mortgage. Last year at this time, the FRM averaged 4.83%.

The 15-year FRM also moved downward for the second week in a row. The 15-year FRM averaged 3.21%, down from 3.27% last week. A year ago, the 15-year FRM averaged 4.17%.

"Mortgage rates were at or near all-time record lows this week amid a rough environment for housing," said Frank Nothaft, Freddie Mac Vice President and Chief Economist. Nothaft noted that over the first nine months of 2011, U.S. households lost almost $400 billion in property values which contributed to an overall loss in net worth of $1.4 trillion. According to Nothaft, "serious delinquency rates" (which are mortgages that are 90 or more days delinquent plus foreclosures) had also increased in the third quarter of the year, breaking a string of six fiscal quarters in which the serious delinquency rate had been in decline.

The money market fund finished this week at 0.50%. The 1-year CD finished at 0.70%.