The company also said severe winter storms in recent weeks will hamper results.
Shares plunged $6.76, or 5.2 percent, to $122.67 in morning trading. The stock has ranged between $89.58 and $137.56 in the past year.
Union Pacific now expects to earn $1.70 to $1.80 per share for the quarter, compared with an original forecast of $1.90 to $2 per share.
Analysts polled by Thomson Financial expect a profit of $1.98 per share, on average.
The railroad now anticipates a full-year profit of $6.76 to $6.86 per share. Analysts predict $7.03 per share.
Fourth-quarter fuel costs are expected to jump by $200 million from the same quarter last year, the company said. However, due to lag times in fuel surcharge collections from customers, the costs won't be recovered until next year, Union Pacific said.
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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