Editorial: An ‘Internet Stock’ With Wheels

Big Brown wowed ‘em on Wall Street last week. United Parcel Service’s first public stock offering opened Nov. 10 at $50, and late the next day was trading around $75, a 50% jump, as the stock-buying public demanded a piece of the 92-year-old trucking firm. Not bad for a staid company in a mature, capital-intensive industry.

UPS’s popularity, in the largest initial public offering in history, has exceeded even the fad-driven stampede to technology stocks, and especially those of small companies with generally unproven products in the Internet niche that have never turned a profit.

The package carrier’s stock was in such demand on the New York Stock Exchange that trading was delayed for about 45 minutes on opening day. There were 10 times more buy orders than there were shares to go around. By late Nov. 11, UPS was valued at more than $90 billion, making it one of the top companies in the nation. The company only put 10% of its stock on the trading block last week, reserving the balance for its traditional owners, the founders, managers and employees of the Atlanta-based company.

UPS’s success, on top of its ongoing victories in the markets it serves, shows that the quality of a company is more important — to employees, managers and investors — than the industry in which a company is located.

Trucking stocks are certainly not in favor in national stock markets these days, but investors clearly believe that this trucking company has a tremendous future.

UPS has continually striven to improve its performance, to add new services and to find new markets. The company said it decided to sell part of itself to the public because it wants the money to help it make acquisitions.

Newspaper pundits have speculated that much of the allure of UPS to the investing public is based on the belief that the company’s business will rise because it will be delivering the projected flood of products that consumers buy over the Internet. But UPS’s rivals haven’t seen the same kinds of gains in their stocks.

In fact, last week’s actions on Wall Street were another tangible reward for UPS’s superior management of its business.