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10-10-2006, 11:00 AM
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Celadon's Smart Moves
Monday October 9, 4:19 pm ET
By Brian Gorman
With the figure for U.S. second-quarter economic growth recently downgraded to 2.6%, and forecasters predicting even lower third-quarter growth, one might think that now is not the best time for a transportation company to expand operations. Trucking concern Celadon (Nasdaq: CLDN - News), though, seems determined not to follow conventional wisdom, and its iconoclasm is likely to translate into long-term value for its investors.
The Indianapolis, Ind.-based company revealed today that it has purchased the truckload business of privately held Digby Truck lines for $21 million. The purchase includes 270 tractors and 590 trailers; however, Celadon plans to keep just 90 of the newest tractors and 180 of the newest trailers and sell the rest. In addition, it is is seeking to hire 150 of Digby's drivers. The purchase fits neatly into a strategy that has served and likely will continue to serve Celadon very well.
First, the company keeps its fleet relatively new, allowing it to hold the line on maintenance costs and comply with emissions requirements. In addition, the newer fleet helps the company attract and retain qualified drivers, which is the second prong of management's strategy. Celadon has successfully achieved a low turnover rate relative to the industry, helping reduce disruption in its service capacity and lower its hiring expenses.
complete article here... (http://us.rd.yahoo.com/finance/news/rss/story/*http://biz.yahoo.com/fool/061009/116042515116.html?.v=1)
Motley Fool
Celadon's Smart Moves
Monday October 9, 4:19 pm ET
By Brian Gorman
With the figure for U.S. second-quarter economic growth recently downgraded to 2.6%, and forecasters predicting even lower third-quarter growth, one might think that now is not the best time for a transportation company to expand operations. Trucking concern Celadon (Nasdaq: CLDN - News), though, seems determined not to follow conventional wisdom, and its iconoclasm is likely to translate into long-term value for its investors.
The Indianapolis, Ind.-based company revealed today that it has purchased the truckload business of privately held Digby Truck lines for $21 million. The purchase includes 270 tractors and 590 trailers; however, Celadon plans to keep just 90 of the newest tractors and 180 of the newest trailers and sell the rest. In addition, it is is seeking to hire 150 of Digby's drivers. The purchase fits neatly into a strategy that has served and likely will continue to serve Celadon very well.
First, the company keeps its fleet relatively new, allowing it to hold the line on maintenance costs and comply with emissions requirements. In addition, the newer fleet helps the company attract and retain qualified drivers, which is the second prong of management's strategy. Celadon has successfully achieved a low turnover rate relative to the industry, helping reduce disruption in its service capacity and lower its hiring expenses.
complete article here... (http://us.rd.yahoo.com/finance/news/rss/story/*http://biz.yahoo.com/fool/061009/116042515116.html?.v=1)