Investors sold shares in Con-way Inc. (CNW) on Sept. 19 after the San Mateo, Calif.-based freight transportation company lowered its expectations for the third quarter.
Con-way said late Sept. 18 that it thinks third-quarter earnings from continuing operations will be between $1.10 and $1.15 per diluted share. The company had previously provided earnings guidance for the 2006 third quarter of between $1.21 and $1.29 per diluted share from continuing operations. Con-way noted factors such as lower-than-expected volumes at its business unit Con-way Freight, as well as changes to the recognition of earnings for Vector SCM, the logistics joint venture with General Motors Corp.
"We knew our focus on yield in the first half of the year would, by design, restrain our growth to some degree in later quarters," Con-way President and CEO Douglas W. Stotlar said in a press release. "What we didn't fully anticipate was a concurrent slowing of economic activity across our customer base."
Con-way's stock dropped 2.18% to $44.80 per share in early trading on the New York Stock Exchange Tuesday.
Standard & Poor's Corp. cut its rating on Con-way to hold from buy, noting the reduction in guidance. Analyst Jim Corridore slashed his earnings estimates on the stock to "reflect a cyclical earnings slowdown that we now see as likely." He cut his 12-month target price to $45 from $69 in a research note on Sept. 19. (S&P, like BusinessWeek.com, is owned by The McGraw-Hill Companies.)