In brief: FedEx raises forecast for first-quarter earnings
New York – FedEx Corp., the world’s second largest package delivery company, on Friday offered a signal that the global economy is improving, as it raised its first-quarter earnings forecast on better-than-expected international shipments and cost cuts.
Its shares leapt more than 6 percent in Friday trading. The company’s performance is seen as a key indicator of overall economic health, but FedEx hesitated to predict when a recovery may ramp up.
“Despite some encouraging signs in the global economy, it is difficult to predict the timing and pace of any economic recovery,” said Chief Financial Officer Alan B. Graf Jr.
The Memphis, Tenn.-based company said it expects earnings of 58 cents per share for the first quarter ended Aug. 31. That’s down 53 percent from a year ago, but well above its previous prediction of 30 cents to 45 cents per share.
On average, analysts were looking for a quarterly profit of 44 cents per share.
FedEx shares climbed $4.66, or 6.4 percent, to close at $77.32 Friday after rising as high as $78.30 earlier in the session. It is still well below it 52-week high of $96.99.
Facing loss of workers, GM rescinds pay cuts
Detroit – General Motors Co., in an effort to keep employees happy as it tries to climb back to profitability, has rescinded white-collar pay cuts it made last spring as it desperately tried to conserve cash and avoid bankruptcy protection.
The struggling automaker was losing staff because its pay scales were no longer competitive with other automakers and manufacturing companies, spokesman Tom Wilkinson said Friday.
The moves come as GM tries to lure buyers back to its brands and fix its image after filing for Chapter 11 earlier this year. This weekend it will launch a new advertising campaign that offers to buy back cars and trucks if customers aren’t satisfied with them.
The earlier pay cuts, ranging from 3 percent for many lower-level workers to 10 percent for executives, saved the company about $50 million but eventually it spent 40 days under bankruptcy court protection, emerging on July 10.
FDIC seizes Corus Bank, a large real estate lender
Washington – Federal regulators on Friday said they seized Corus Bancshares Inc., a major Chicago-based lender to condominium, office and hotel projects, adding it to the long list of banks that have succumbed this year to the recession and waves of loan defaults.
The Federal Deposit Insurance Corp. took over Corus Bank, which had $7 billion in total assets, and its deposits. The deposits will be assumed by MB Financial Inc., which is also based in Chicago.
Corus Bank’s 11 branches will open on their next normally scheduled business day as branches of MB Financial Bank. Regular deposit accounts are insured up to $250,000.
The closure of Corus Bank, one of the largest banks to fail this year, will cost the FDIC $1.7 billion.
The FDIC, an independent agency that seeks to maintain stability and public confidence in the financial system, said Friday it also shut down two more banks: Brickwell Community Bank in Woodbury, Minn., with $72 million in assets and about $63 million in deposits, and Venture Bank in Lacey, Wash., with $970 million in assets and about $903 million in deposits.
With the three closures announced Friday, the number of banks that have failed this year stands at 92.