Dec. 8 (Bloomberg) -- FedEx Corp. fell 12 percent in late trading after the second-biggest U.S. package-shipping company said annual profit may be as much as one-third lower than analysts expected because of a “significantly weaker” economy.

Earnings for the fiscal year ending in May will be in a range of $3.50 to $4.75 a share, down from an earlier projection of $4.75 to $5.25, the Memphis, Tennessee-based company said in a statement today. FedEx had been expected to earn $5.23, the average of 16 analyst estimates compiled by Bloomberg.

“It must mean that first week of December volumes have been just dismal,” Donald Broughton, an Avondale Partners LLC analyst in Nashville, Tennessee, said in an interview. “For them to issue such a dour outlook has to mean that current volumes are pretty abysmal.”

FedEx revised its forecast as companies including Con-way Inc., the second-biggest U.S. trucker, and chipmaker Texas Instruments Inc. also pared their profit projections, citing a drop in demand amid the worst economic slump since the Great Depression.

U.S. stock-index futures slid after a global rally as President-elect Barack Obama pledged to boost the U.S. economy with the biggest public-works spending package since the 1950s. Standard & Poor’s 500 Index futures fell 0.5 percent after the close of New York Stock Exchange composite trading.

Con-way, Texas Instruments

Con-way said today it cut 1,450 jobs as well as reducing its full-year 2008 forecast, citing freight volumes that had tumbled to 2003 levels. Texas Instruments, whose total chip sales trail only Intel Corp. among U.S. companies, blamed the recession for curbing electronics purchases.

FedEx fell $8.87 to $65.56 at 6:23 p.m. in trading after the NYSE’s close. Earlier, the shares gained 72 cents to $74.32 in NYSE composite trading.

The revised forecast means FedEx will earn between 70 cents and $1.95 a share during the fiscal year’s second half, said Broughton, who rates the company “market outperform.”

Some analysts had expected a “December surprise” for shippers, as smaller inventories at retailers drove consumers to order more Christmas goods on the Internet, Broughton said.

FedEx’s revised forecast “suggests that’s not the case,” he said. The company’s move came after it said it was redoubling sales and marketing efforts, fuel prices declined from record highs and Deutsche Post AG’s DHL announced its exit from the U.S. domestic shipping market.

Second Quarter

FedEx said it expects to report profit of $1.58 a share for the second quarter that ended Nov. 30, within the range of $1.40 to $1.60 it previously forecast. The company was expected to say it earned $1.56, the average of 15 analyst estimates compiled by Bloomberg.

“Second-quarter results benefited from rapidly declining fuel prices and continued cost management,” Chief Financial Officer Alan Graf said in the statement. “Demand for our services weakened sequentially throughout the quarter, and global economic trends continue to worsen, substantially reducing our second-half outlook.”

The company plans to report full financial results for the quarter on Dec. 18.

FedEx also cut its fiscal 2009 capital-spending plan by $500 million to $2.5 billion, Graf said.

United Parcel Service Inc. is the largest U.S. package- shipping company.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

Last Updated: December 8, 2008 18:30 EST