Markets up ahead of Fed Statement, FedEx (FDX) beats expectations and Sony to post staggering loss.

Bourbon & Bayonets / Wednesday, September 17th, 2014

Markets were heading higher on Wednesday ahead of Federal Reserve announcement due out at 2:00 pm. The statement could give some guidance as to when the Fed plans on raising interest rates and the time line as to how soon they plan on making the move. It is not expected that they will fully tighten their monetary policy until the middle of 2015, however the announcement today could give insight into their plans. The announcement today may also reveal a change in how the Federal Reserve is viewing the labor market, if the move is positive then this could mean progress towards their goal of full employment. They will also be announcing economic projections along with interest rate plans that will extend into 2017.

Shares of FedEx (FDX) were on the rise after the company announced a spike in profits. The shipping company’s fiscal first-quarter came in with a jump of 24% in profits, which was largely attributed to a strong achievement by their ground business and stronger volumes. Net income was up to $606 million, or $2.10 per share, which was up from the $489 million, or $1.53 per share, this time last year. Revenue was up 6% to a total of $11.7 billion. The company is getting some help from growth in online shopping, which in turn helps generate strong ground shipments. When broken down, the company’s FedEx Freight revenue was up 13%, Ground was up 8% and FedEx Express grew 4%. The company says they are on task with previous 2015 fiscal earning projections, which are expected to come in between $8.50 and $9 per share. Analysts are expecting earnings to come in at $8.84 per share. FedEx also has announced that starting on January 5, 2015 they will be increasing their rates.

Sony announced that they are expecting to a post staggering loss after a write down of the value of their smartphone business. The company said that they will post an annual loss of $2 billion and cancel dividends. This will be the first time since the company has gone public that they have canceled dividend payments for the year. Kazuo Hirai, president of Sony, said, “This is the very first time we ever eliminated a dividend. For more than 50 years we always paid a dividend. The entire management takes this very serious.” They have also announced they will be cutting nearly 15%, about 1,000 positions, of staff in their mobile communications business’s.

That’s all for today,

Warren Gates, Normandy Research

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