Here's one more........
Jan 28, 2008
Shake-up at YRC Worldwide expected
One of YRC Worldwide Inc.’s
regional trucking companies may be closed or restructured when the Overland Park
trucking giant on Monday discloses its 2008 plans, a prominent investment
analyst said Friday. Ed Wolfe, trucking analyst for Bear Stearns & Co.,
issued a report speculating that YRC executives may announce a shutdown of part
of USF Reddaway’s operations. Reddaway, which operates in 15 Western states
and Canada, absorbed another YRC regional unit, USF Bestway, last year. Bestway
operated mainly in the Southwest, and combining the two carriers has resulted in
poorer service at Reddaway, Stearns wrote. YRC’s biggest regional carrier is
USF Holland, which operates in the Kansas City area. A YRC spokeswoman could
not be reached for comment Friday. YRC has struggled mightily in the past
year, blaming a softening economy that hit the trucking industry sooner than it
did other sectors. The company will release its fourth-quarter and annual financial results on Monday as well.
Bill Zollars, YRC’s chairman and chief executive, announced earlier this
month that YRC would take a pretax charge of up to $800 million, mainly due to
the declining value of its regional trucking companies. Earnings for the quarter
and full year will be disappointing, Zollars cautioned.
Analysts like Wolfe also believe YRC’s two big acquisitions this decade —
Roadway Corp. and USF Corp. — haven’t gone as well as expected. He said that
could result in a big shake-up come Monday. “YRCW could announce a major
restructuring, further write-downs and a plan for further cost-savings going
forward,” Wolfe said in his report. “There is little evidence of YRCW’s
supposed cost-savings related to the Roadway and USF mergers at this point.”
YRC’s two national carriers, Yellow Transportation and Roadway, may also be
affected, according to Wolfe. Those subsidiaries may merge some operations by
consolidating terminals in the same city or integrating sales and office
functions, Wolfe said. YRC is trying to wring $100 million in costs out of the
entire company, including recently discontinuing its NASCAR sponsorship.
Zollars and other YRC executives are also expected to discuss Monday the impact
of the tentative five-year contract with the Teamsters union, which is being voted on by YRC drivers and dockworkers. Reddaway is not a union carrier, although the Teamsters are in an organizing drive.
After plunging to a low of $12.62 a share on Jan. 4, YRC’s stock has jumped 49 percent. The stock closed at $18.86 a share on Friday.
Wolfe said he believes YRC’s stock has risen and outperformed the
trucking sector as a whole due to short traders taking profits amid the Fed’s
actions to spark the economy. Trucking companies, affected early in economic
cycles, are also popular among investors who believe business conditions will
improve later this year.
http://www.kansascity.com/business/story/461550.html
