Blanchard Railroad Week in Review, Fourth Quarter 2007

The Railroad Week in Review:
Fourth Quarter 2007

Current Issues

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Week in Review, 10/5/2007
Why the J is such a great fit for CN. CORP embargoes Coos Bay Line; the
politicos as usual get it wrong. Wall Street begins to take notice of HR
2125; excerpts from UP CEO Jim Young's "Fall Peak" STB letter re implication of 2125 et al. EP 646, the “Small Rate Case” Decision, revisited as to short line perils.
Week in Review, 10/12/2007
Why revenues are up even though revenue unit counts are down. Short lines reporting through RMI RailConnect show mix of low-rated commodities increasing as Class Is move in the opposite direction. Some thoughts on what's to be done.
Why CURE offers no cure: a fable. NS cuts earnings estimate 5 cents on below-the-line items, core railroad unaffected; ECP-equipped coal train begins operations in Penna. Week 39 revenue unit count shows short lines still off more than Class Is. KCS makes top quintile in Fortune's 100 fastest-growing companies list, personnel changes.
Week in Review, 10/19/2007
Earnings season kicks off with strong results from CSX and Union Pacific. The Children's Investment Fund, holder of a 5% interest in CSX, challenges CSX management to change its ways and gives specifics. BNSF's 12th annual shortline meeting -- "working closer, moving forward" -- lives up to its theme.
Week in review, 10/26/2007
GWR offers to buy controlling interest in Maryland Midland. CN ops income drops 9%; revenue units drop but GTMs remain unchanged. BNSF reports record quarterly revenue and quarterly ops income, up 17% absent one time enviro charge. NS disappoints on revenues, car counts and ops income. House RR Safety Bill passes.
Week in Review, 11/2/2007
Earnings week concludes with CP and GWR. KCS summary from last week. Table comparing Class I results of particular interest to short line operators and shippers. Brian Holtz' rebuttal to my bigger-car theory.
Week in Review, 11/9/2007
Short lines have a lot to gain from a close review of CP's "Investor Day" proceedings; out-takes herewith. Table of short line commodities on CP. Comments on and implications of the STB's proposed rulings on paper barriers. NECR re-opens a bigger, taller, wider Bellows Falls Tunnel. Brenda Taylor decamping from the NS short Line Group to join the ag marketing team.
Week in Review, 11/16/2007
UBS Rail Analyst Rick Paterson picks up the capex theme in his November 8 note. The folks at Bear Stearns have been out talking to customers again. On the carload side of the Bear Stearns household, equipment analyst Peter Nesvold may have discovered an opportunity for short lines to pick up cars cheap.
No Week in Review, 11/23/2007 -- Thanksgiving Week
Week in Review, 11/30/2007
Watco knocks the cover off the ball with a super Business Update presentation. Getting a handle on how foreign exchange affects short line revenues (it doesn't). P&W net drops 90% yoy. Coal, ag and copper notes. American Eagle and paper barriers.
Week in Review, 12/7/2007
Tom Murray's RR stock Watch shows why it's important to watch RR stock prices for what they can tell you about the RR itself. Bear Stearns 4Q update. Jason Seidl's GWR report. More P&W from Chop Hardenbergh. Larry Kaufman on branch line sales. IANR opens Manly yard.
Week in Review, 12/14/2007
The STB shot down the Michigan joint venture between NS and Watco citing what it saw as too much control remaining with NS. I've since spoken with a number of interested observers including NS, Watco and Wall Street types and the consensus is there is yet a second shoe to drop. Here too begins the "Follow the Money" series for short lines.
Week in Review, 12/21/2007
Union Pacific stock drifted downgrade to the tune of nearly ten smackers Wed AM as the company guided the low-end Q4 earnings estimate down. CSX may be facing an uphill fight for Board Seats. RailAmerica is looking to close the ex-SP Siskiyou Subdivision on the CORP. The Michigan Central decision drew some excellent reader feedback. For a short lesson on how to kill railroad investment, one need look no further than upstate NY. [This concludes the 2007 series.]

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Roy Blanchard.215-913-7740 mobile, royblan@icloud.com
Laura Blanchard, 215-985-1445, lblanchard@rblanchard.com