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By Jason Stipp | 06-24-2011 03:00 PM

Time to Retool?

Some fine-tuning may be needed at ConAgra, Boeing, the Federal Reserve, and the housing market, says Morningstar's Jeremy Glaser.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to the Friday Five.

Here at the Friday Five, we don't feel the need to mess with success, but Morningstar markets editor Jeremy Glaser sees some areas where retooling really does need to be implemented and one area where retooling has met with great success.

He's here to share those stories with me today. Jeremy, thanks for being here.

Jeremy Glaser: You're welcome Jason.

Stipp: So, what do you have for the Friday Five this week?

Glaser: We'll start with the success story at FedEx, and then we'll look at potential retoolings at ConAgra with commodity costs, for Boeing at the Paris Air Show, at the Federal Reserve, and finally, in the housing market.

Stipp: So, FedEx reported this week and they had some pretty good numbers. It didn't just happen by chance. What helped them out there?

Glaser: FedEx has been trying for a while to really reinvigorate their freight business, and to some extent, their ground business. They're really known for their Express, Overnight, Envelope Delivery on the airplanes. That's really their bread and butter. But an area that hasn't been so profitable over time has been the less-than-truckload freight. You see those FedEx trucks going down the highway.

This quarter they really were able to finally turn it around and bring that to profitability. It wasn't hugely profitable compared to their other divisions, but they're really progressing in the right direction. They're really making sure the acquisitions they made in that area really are working with the rest of the business in the way that they wanted to. I think it's a great way that the management team focused on the problem, made the changes they needed to do, and it just shows that FedEx is a well-run company and is really doing a good job there.

Stipp: Elsewhere in corporate news, at the beginning of the year, we were worried about how commodity costs would affect companies. We've actually seen that it is affecting some companies, and they might need to take some action because of some of the higher prices we've seen.

Glaser: It's really having a big impact. This week we heard from ConAgra, which is the maker of all sorts of consumer packaged goods, foods products, basically saying that anything that they got in terms of price they had to give back just from the huge amount of food inflation and input cost inflation that they were seeing in making their products. And this in some ways was a little bit unique to ConAgra in that it hurt them so badly.

Some of the other companies like General Mills have maybe a little bit more pricing power, have a better economic moat, have been able to pass on more of that cost, been able to push on their suppliers to get lower cost--ConAgra doesn't have that kind of brand equity, doesn't have that kind of ability to push those suppliers to push prices higher, and they've really seen a lot more trouble, and I think in order for them to really compete again and try to compete with the larger players in the industry, they're going to have to find a way to bring those costs down, find a way to get their brands a little bit more power, and if not, they're going to be in big trouble for a long time.

Stipp: In the aerospace industry, Jeremy, Airbus has gotten some good news recently. Will Boeing have to think about retooling some things?

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