I’m hearing so many people referring to CSX’s “dire” financial condition, lagging maintenance, frequent locomotive breakdowns, etc., and that it is destined to be the next Fallen Flag. Also that savvy investors buy stock in all the Class I RR’s except CSX. This kind of talk is quite upsetting to me, since CSX is essentially the only freight-hauling railroad in the Baltimore-Washington region. I’ve tried doing Google searches but can’t find any recent news about CSX’s situation.
Can anybody give me some idea of what is likely to happen to CSX, what routes will be abandoned, etc?
You mayhave some old info about CSX.I have read that they have made many improvements recently.
There was a sort of take over tried by TCF,a hedge fund,recently.TCF wants CSX to fore go maintanence and improvements and concentrate on profits only.A compromise of sorts was worked out.
I know that this is an over simplification.
I don’t think any abandonments are planned.CSX has been adding double track and sidings.
You got that right! I heard that when Conrail was split up, NS got all the ‘plum’ routes - the ones with future business potential - while CSX was left with the dying lines.
CSX has pretty much always been profitable, but profitability hasn’t always meant that it’s been a well-run company. It’s hard for a big railroad to not be profitable nowadays.
Thanks to some bad policies in the past century, CSX has quite a reputation to overcome. Having those hedge-fund folks on the Board isn’t going to help in that regard. They always seem to be in a “defensive” mode, doing a “Me, too!” with positive NS policies.
I think what you hear has been and exageration of facts. An investment fund from England, called I believe the Children’s Fund, has been struggling to get control of CSX through thier investment, claiming that CSX should take more to the bottom line and thus as dividends to the shareholders. CSX current management on the other hand says that current revenues have to be put back into the railroad infrastructure because of current safety and reliabilty plus future needs. I think that is a very simplistic explanation but goes to what the original questions was here.
Remember the dying gasp of the Penn Central: "Dividends! Must… pay… DIVIDENDS!" Instead of plowing the money back into the railroad’s infrastructure, the PC insisted on maintaining the age-old PRR tradition of always paying dividends, and that served to mask the rot and decay under the covers.
I’m not saying CSX is anywhere near that condition, but the bane of an incompetent executive board is the push to generate dividends instead of keeping the corporation’s backbone alive.
Sorry - but my loathing of executives made me get in a shot.
That’s the problem that has been rotting the American ecomony for decades. EVERY quarter, the dividends MUST BE HIGHER THAN THE LAST QUARTER. THE STOCK PRICE MUST GO HIGHER AND HIGHER AND HIGHER.
The long term health of the overall ecomony is being endangered by the endless search for the endless profits.
Some day the entire bottom may drop out. And the fat cats responsible will be sitting on their millions.
Far too many business executives think that the shareholders are the most important people to the business. SHAREHOLDERS ARE LOAN SHARKS! They may put money into a business, but if they are demanding double their money back in a short time, they are detrimental to the business.
The only people vital to a business are the customers. They provide the income. Next in importance are the employees who directly interact with the customers or the product. These are the ones who will make the customers happy they gave the business their money. Shareholders who want a quick return on an investment shold put their money into lottery tickets!
CSX has made some poor management decisions in the past, but they have learned from them and I’m sure they will be around for a while.
CSX isnt going anywhere, sit back relax and think positive, they got a long term lease there in Jacksonville, old time Southern Railway slogan “Look Ahead Look South” [tup]
Thanx everybody for replying to my original question. I guess Mike Ward and his team have got a good handle on things. Hopefully they’ll stay that way…
CSX always seems to be a source of controversy, but I am sure they will be fine. as long as they can keep their act together, but in the railroad world whoever knows what will happen next?
Michael Ward has been working hard to undo all the damage that was done by his predecessor…John Snow…and that has been a big, big job. The fact that TCI engaged in th proxy fight is proof that there is signifigant value in CSX. Hedge Funds don’t put their investments in locations that they can lose the investment…they are there for signifigant enhancement to the investment (one way or another).
I think this is turning into a rehash of some of the former merger posts. In those posts, one good reason was given as to why UP would not be interested in buying either CSX or NS: they would wind up earning less by having to give business to the competition. The UP (at least at that time) is better off giving CSX and NS each more than 50 percent of their interchange business. I’ve heard some figures suggesting that BNSF and UP are more evenly matched lately, so this argument may no longer hold.
Still, I suspect that UP isn’t going to try and gobble up CSX on its own. However, if BNSF and NS decided to merge, that would leave them with little choice–pretty much the way things were when UP had to merge with SP.
I’m watching a software unit test run, and because it’s so boring I swiped the Jul/Aug, 2008 issue of Mobile Enterprise magazine that nobody’s claimed at the office mail-drop.
It has a big article and cover photo about CSX’s mobile solution for track inspection. The article features Larry Beiss. Apparently their use of the latest mobile communications has made such an improvement that the FRA consider’s CSX approach the standard in the rail industry.
Here’s a quote (words by Michelle Maisto):
“Before CSX deployed its mobile solution, inspector turnover was high, and it’s easy to see why. The rule book used by inspectors was literally six inches thick. Remembering what needed to be inspected, and when, required exacting organizational skills. Missing an inspection, or failing to locate the paper that proved one had been completed, led to government fines.”
CSX is using OQO handhelds to record inspection data and weighs a pound. They claim a 10% reduction in train accidents, and a $600,000 annual cost savings, not including a $50-100,000 savings in fines.