Tag Archives: request

Will Amazon’s Transportation Fleet Bring Down Hammer On FedEx, UPS?

It’s an ambitious plan by Amazon ( AMZN ), to procure a fleet of 40 airline freighters and lessen its dependence on FedEx ( FDX ) and United Parcel Service ( UPS ). The 40 aircraft that Amazon plans to have fully operational by 2018 will enable it to bring as much as 30% of its current delivery volume in-house, according to a research report Monday by Moody’s Investors Service analyst Jonathan Root. In terms of short- and medium-haul aircraft, Amazon’s fleet would be 21% the size of UPS’ and 14% the size of FedEx’s, says Root. In terms of payload capacity, Amazon’s fleet would be 26% the size of UPS’ and 17% of FedEx’s, excluding their largest freighters that fly mostly long-haul routes for those companies, Root wrote. “As significant as that sounds, the business that UPS and FedEx will lose may not be as bad as it sounds,” Root wrote. “Revenue and average daily volumes at UPS and FedEx will be hurt, but there’s plenty of opportunity for them to replace that lost business with growing volumes from higher-yielding customers” and growth in e-commerce. Root also says that Amazon is one of the least profitable customers for UPS and FedEx, because Amazon’s size enables it to negotiate considerable discounts. “The extent to which UPS and FedEx can offset volume declines from Amazon with new business from other customers will determine how beneficial or detrimental Amazon’s plan will be to the companies’ segment operating margins,” Root wrote. Amazon stock was down a fraction, near 700, in afternoon trading in the stock market today , after touching a record high above 722 on May 12. It’s an IBD Leaderboard stock. UPS stock was down a fraction, while FedEx was up a fraction. The threat would grow if other large retailers follow Amazon’s lead, which he says is possible. “We understand that Wal-Mart Stores ( WMT ) is investing to improve its e-commerce positioning by building eight e-commerce warehouses,” Root wrote. Wal-Mart already offers free shipping on orders of more than $50, and it might broadly offer an e-commerce membership that includes free shipping, as Amazon does with its Amazon Prime membership service. Still, it’s not clear how deeply Amazon will dive into transportation services. “We estimate that Amazon could build a competing U.S. ground network for between $8 billion and $15 billion,” Root wrote. “We believe the company has the financial capacity to continue adding fulfillment centers, pickup locations and local and regional delivery operations, it if chooses to do so.” More than that, Amazon could offer its delivery services to the many third-party sellers on its site. “Such an offering would be more problematic for UPS’ and FedEx’s longer-term financial performance,” Root wrote.

Google’s Android Plea: Oracle Took No Risk, Wants Big Payday

Alphabet ’s ( GOOGL ) Google says Oracle ( ORCL ) “took none of the risk” in developing and marketing Android software, but now wants “a lot of the money” from the mobile operating system’s success, says a report from tech website Ars Technica . In closing arguments to a jury, Google attorney Robert Van Nest said the copyright infringement case’s outcome is important for the software industry, reported Ars Technica. Oracle is seeking nearly $9 billion in damages from Google. It’s slated to make its closing statement Monday afternoon. Oracle claims that Google violated its copyright on parts of the Java programming language when it created the Android mobile operating system, now used in mobile phones worldwide. Oracle acquired Java when it purchased Sun Microsystems in 2010. “This is a very important case, not only for Google, but for innovation and technology in general,” Van Nest told the jury. “What Google engineers did was nothing out of that mainstream. They built Android from scratch, using new Google technology, and adapted technology from open sources. “Now we’re in a situation where Oracle, which had no investment in Android, took none of the risk — they want all the credit and a lot of the money. And that’s not fair.” Oracle says Google has earned $21 billion in profit from Android-based smartphones. At its I/O developer’s conference last week, Google showcased the Android N software upgrade, which includes an automotive variant and a virtual reality mode for smartphones. If Oracle wins its court case, it might also seek royalties, analysts say. Shares of both Alphabet and Oracle were down a fraction in afternoon trading in the stock market today .

Verizon, Yahoo Both At JPMorgan Event — But It’s Not A Date, Yet

Verizon Communications ( VZ ) and Yahoo ( YHOO ) are both slated to appear at the JPMorgan ( JPM ) Technology, Media and Telecom conference in Boston on Tuesday morning, with the phone company still viewed as the front-runner to buy the struggling Web portal. While it’s unlikely either company will comment on any such marriage, either one might comment on their strategy going forward if a deal falls through. Verizon acquired AOL for $4.4 billion last June. Verizon CEO Lowell McAdam is scheduled to give the morning keynote address. Yahoo CFO Ken Goldman is expected to take part in a question-and-answer session at 9:20 a.m. EST. McAdam doesn’t appear on Verizon earnings calls, leaving that chore to CFO Fran Shammo, but he did speak at Verizon’s annual shareholders meeting on May 5. When McAdam appear at venues such as Goldman Sach’s annual Communacopia conference in September, there’s usually news. At Communacopia, McAdam touted Verizon’s plans for 5G wireless services. Verizon CFO Shammo last week said that a six-week strike by nearly 40,000 wireline workers is beginning to impact Verizon’s financials . Yahoo’s Goldman might in general comment on Yahoo’s sale process, as he did at a Morgan Stanley conference in March. At that meeting, Yahoo’s Goldman defended the Internet pioneer’s strategy. Yahoo recently added four new independent directors to its board under pressure by activist investor Starboard Value. One question is whether Starboard will still push for a sale if reports prove accurate that bids are coming in lower than expected. The Wall Street Journal reported last week that Verizon or private equity firms might offer as little as $2 billion to $3 billion  for Yahoo, when analysts had been estimating bids in the$4 billion to $8 billion range. CNBC’s David Faber on Friday, in a tweet, declared that report “completely wrong.” Berkshire Hathaway ( BRKA ) Chairman Warren Buffet , a noted investor who generally stays away from tech companies, might back a group led by Quicken Loans founder Dan Gilbert, if it makes a bid. Yahoo stock was up 1% in early afternoon trading in the stock market today , near 37, while Verizon stock was down nearly 1%.