UPDATE: FedEx Shares Drop On Downbeat Q2 Earnings

Shares of FedEx FDX dropped more than 3% in pre-market trading after the company reported weaker-than-expected fiscal second-quarter results. The Memphis, Tennessee-based company posted quarterly net income of $616 million, or $2.14 per share, compared to $500 million, or $1.57 per share, in the year-ago period. Share repurchases benefited latest quarter earnings by $0.16 per share. Its revenue rose 5% to $11.9 billion. However, analysts were expecting earnings of $2.22 per share on revenue of $11.98 billion. Its operating income climbed 22% to $1.01 billion, while operating margin widened to 8.5% from 7.3%. Revenue for the FedEx Express segment gained 3% to $7.02 billion, while revenue for the FedEx Ground segment increased 8% to $3.06 billion. Revenue for the FedEx Freight segment climbed 11% to $1.59 billion in the quarter. “FedEx posted strong results and a higher operating margin in the second quarter, with continued growth in volumes and base yields in each of our transportation segments,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. FedEx affirmed its FY15 earnings outlook of $8.50 to $9 per share, and capital spending forecast of $4.2 billion. FedEx shares slipped 3.30% to $168.51 in pre-market trading.