Anybody else tired of the wise#$%$ negative press?
I just watched the always obnoxious Jeff Macke interview a learned observer of the delivery business on a segment of the Yahoo Finance "Breakout" program. Besides trashing UPS from start to finish without even a mention of FDX, he actually posits the concept of Amazon "firing" UPS as it main carrier and the guest even jumps in by suggesting UPS fired itself. They muse about the stupid drone concept for a bit before both move onto whether or not Amazon will eventually establish its own delivery network and never again have to depend on the "weak link" of having others (outside delivery services) relied upon to keep the promises Amazon has made to its customers. This segment was so irritating it just reinforced the axiom that those shows are simply pomp and circumstance without going into the nuts and bolts of why problems might arise Not once did they even suggest that any company can pump out stuff up to the last minute in a fevered attempt to goose year-end sales. It seems to me that Mr. Bezos should come clean and state that UPS and FDX shouldn't shoulder all the blame for being overwhelmed by far more than projected volume. Surely he knew that the weather conditions were tough in many parts of the country and that their volume was far in excess of what they told carriers it would be. In effect, they helped screw themselves. Of course, the only people that can't appreciate that are their customers and jerks like Jeff Macke. But here's the thing and it gets back to the Amazon self-delivery concept. As it its, Amazon barely makes a profit and, absent the 4th Quarter mania, would be in the red. that's why they go hog wild to sign people up for their Prime delivery service and ship product out at the last minute. Their forward price earnings ratio is 151 vs. UPS' 18 or so. They may earn a whopping $.73 per share in 2013 if analysts are on target. UPS will be between $4 and $5 per share. (part 1).
UPS should respond by entering the direct consumer sales business and compete directly with Amazon. UPS already has the core capabilites to compete directly with Amazon (whse, tech, transport and the CUSTOMER BASE ) now we need some drect to consumer websites. This peek proved UPS is in a growing market again. It is hard to go wrong investing in the market leader when one of the biggest challenges they face is keeping up with demand....OR you can buy a modern day DOT BOMB that is easy to replicate and pay 10x the forward PE.
So glad you posted this "spot-on" analysis of our so-called "learned analysts" who only show ignorance and bias. The morning after Christmas I went on-line and the first headline I saw was 'UPS RUINS CHRISTMAS!, by "The Motley Fool". What ruined Christmas was the spoiled Americans who want to be catered to by expecting last-minute delivery. Sure would like to have seen them on a UPS truck bustin' their buns getting the job done, unlike them sitting in a warm, cozy office on their fat butts spouting such drivel! The sad part is, they get paid well for their bashing.
By the way, doesn't UPS get voted "one of the TOP 10 most well-run companies in the U.S"????.
Part 2. So, it my view it would be patently absurd for Amazon to even consider trying to develop its own delivery operation when it's barely making money as it is. If they desire to offer a same day delivery or Saturday delivery concept, that might make sense if their customers are willing to pay for that special service. I hope our sales/marketing people are standing firm with the shared responsibility of what went wrong at peak. Knowing us, we'll be more prone to take responsibility than Amazon since other customers were impacted as well. Beyond that, the storm that just affected 1/3 of the population in this country certainly isn't helping things. I think the folks that worked their way thru an incredibly difficult and under-appreciated peak season should be commended and they are definitely earning their stripes again today.