QUOTE AND NEWS
newratings.com  Nov 20  Comment 
WASHINGTON (dpa-AFX) - Pitney Bowes Inc. (PBI) Thursday announced the release of MapInfo Pro 64 bit, which simplifies map production and enables businesses to quickly and easily create and analyze important geographic data. According to the...
newratings.com  Oct 30  Comment 
WASHINGTON (dpa-AFX) - Technology solutions provider Pitney Bowes Inc. (PBI) Thursday said third-quarter net income was $132.29 million or $0.65 per share, compared to a loss of $5.53 million or $0.03 per share last year. Earnings per share from...
Benzinga  Oct 29  Comment 
New global, online shopping research from Pitney Bowes Inc. (NYSE: PBI) reveals that cross-border ecommerce is gaining traction with nearly 40 percent of consumers having purchased goods online from another country. The market opportunity for...
Forbes  Oct 28  Comment 
Despite an expected dip in profit, analysts are generally optimistic about Pitney Bowes as it prepares to reports its third-quarter earnings on Thursday, October 30, 2014. The consensus earnings per share estimate is 46 cents per share.The...
newratings.com  Sep 29  Comment 
WASHINGTON (dpa-AFX) - Pitney Bowes, Inc. (PBI) said it has expanded its business relationship with Incepture Print Solutions, a growing Florida-based print and mail fulfillment organization that has been producing customer communications using a...
DailyFinance  Sep 24  Comment 
Pitney Bowes Inc. (NYSE:PBI) will feature its industry leading integrated print and mail solutions in booth #1224 at Graph Expo 14, September 28 – October 1 at McCormick Place in Chicago, IL. As the complexities of the...
Forbes  Sep 22  Comment 
Shareholders of Pitney Bowes Inc (NYSE: PBI) looking to boost their income beyond the stock's 3% annualized dividend yield can sell the January 2017 covered call at the $32 strike and collect the premium based on the $1.70 bid, which annualizes to...
The Hindu Business Line  Aug 25  Comment 
Pitney Bowes has named eight start-up companies in India who will join its Accelerator program in India. This is part of Nasscom’s 10,000 Start-ups initiative. The selected companies are...




 
TOP CONTRIBUTORS

Pitney Bowes Inc. (PBI) is the world's largest seller of postage meters, devices that allow companies to print postage on letters rather than using stamps. The company has over 2 million customers worldwide. Its sale and operation of postage meters is heavily regulated by national governments, since printing postage essentially amounts to printing money, and this creates high barriers to entry that protect Pitney Bowes' virtual monopoly in this business. PBI controls 80% of the domestic postage-meter market and 65% internationally.[1]

While postage meters are in continual demand by any business that sends a lot of mail, direct mailing is being increasingly displaced by internet advertising, and this limits PBI's growth opportunities within its core market. To build revenues in the long term, PBI has turned its attention outside of postage meters into businesses such as document services, including letter production and design software, facilities management, and outsourced marketing.[2] The firm has made $2.5 billion in acquisitions since 2000 in order to diversify beyond the postage meter business. Notable acquisitions in 2007 - when the firm spent $570 million buying other companies - included MapInfo (Troy, NY) and Digital Cement (Toronto, Canada). [3]

However, these businesses are relatively new to PBI, which has historically focused exclusively on postage meters since its founding in 1902.[4] Industries such as document management, information intelligence, and legal services are not regulated by the government, and there are low barriers to entry which create competition in these markets - something Pitney Bowes does not deal with in the postage meter business. In these markets PBI is forced to compete with firms like Xerox and IKON Office Solutions (IKN) that have specialized in these businesses for longer and have established customer relationships. This presents a challenge to PBI as it builds an economic niche outside of its traditional dominance in postage meters.

Business Overview

PBI's biggest source of revenue is its U.S. Mailing division. The company's 85 acquisitions since 2000, along with its international postage meter operation, make up the rest of PBI's business. PBI divides its offerings into two main sections, Mailstream Solutions and Mailstream Services.

Business & Financial Metrics[5]

In 2009, Pitney Bowe

Business Segments[6]

Pitney Bowes has seven reportable operating segments.

  • U.S. Mailing (36.2% of total revenues): This segment sells, rents, and finances the company's mailsorted mail and cross-border mail services.[7]
  • Marketing Services (2.5% of total revenues): This segment provides direct mail marketing services on behalf of clients to targeted customers.[7]

IMAGE:PBI-Segments2009.jpg[7]

Trends/Forces

The lack of growth in the postage meter market hurts PBI's core business segment.

PBI's U.S. Mailing division, which best represents PBI's original core postage meter business, accounted for more than 36% of the firm's total revenues in 2009. PBI controls 80% of the domestic postage-meter market and 65% internationally.[8] High barriers to entry faced by potential competitors protect this market share; since postage meters essentially print money, governments tightly regulate this industry and limit the number of providers.

However, growth in this division's revenue is stagnant.[9] This lack of growth is due to the fact that use of computers has increased dramatically since the 1990s, and as a result, businesses are increasingly using internet advertising as a less expensive substitute for brochures and catalogs sent through the mail.

PBI's growth strategy undermines its competitive advantages.

The rise of E-Commerce has significantly decreased the demand for PBI's postage meter services, so PBI has reacted by rapidly expanding into other areas (see the list of divisions in business overview above). Although PBI has invested significant capital in its own research and development, its expansion has thus far been accomplished through $2.5 billion in acquisitions since 2000. These purchases have included a wide variety of companies, including MapInfo (location intelligence), Digital Cement (customer relationship management), Ibis Consulting, Inc. (electronic legal discovery services), and Group 1 Software, Inc. (mailing efficiency software), among others.

PBI does not have the same competitive advantages or market dominance in these areas as it does in its postage meter segment. Other companies, already dedicated to these other markets, are more established in their respective specialties and have existing relationships with customers. The success of PBI's expansion strategy will depend on PBI's ability to acquire companies that are already well-established and can maintain a niche in their markets.

The introduction of shape-based postage pricing increases demand for PBI's services.

The most notable change included was a transition from purely weight-based pricing to a new system that took the shape of the piece of mail into account as well. [10] Under the new regulations, postage will be cheaper for pieces that are more easily processed by USPS equipment. Letter-size envelopes will fare the best, followed by flats (e.g. manila envelopes) and then parcels. Due to these changes, customers - particularly large companies that regularly send large volumes of mail - stand to save lots of money by conforming to the most cost-effective shaping standards.

PBI will gain in two ways as a result of shape-based pricing. First of all, demand will increase for products like the Shape Based Sizing Template, which helps mailers compute the exact, correct postage for their mail according to the new, more complex shape-based pricing rules. Secondly, demand will also increase for machines offered by PBI that fold mail into the specific shapes that cost the least to send under the new system; for example, customers will be interested in machines that will let them change mailings that are currently formatted as flats into letter-shaped envelopes (which are now less expensive). [11]

Competition

As mentioned above, the postage meter business is tightly regulated by the government because the meters essentially print money. Only four companies other than PBI are licensed to produce and sell postage meters in the United States:[12]

Pitney Bowes also competes with other companies in its other business segments. These companies include:

References

  1. Putting a New Stamp On Pitney Bowes, Smartmoney.com, 01/03/06
  2. Pitney Bowes Fast Facts, 2008
  3. Pitney Bowes Fast Facts, 2008
  4. Wikipedia:Pitney Bowes
  5. PBI 2009 -10-K pg. 10  
  6. PBI 2009 -10-K pg. 78  
  7. 7.0 7.1 7.2
  8. Putting a New Stamp On Pitney Bowes, Smartmoney.com, 01/03/06
  9. PBI 2007 10-K, page 11
  10. USPS news release #07-041, 5-07-07
  11. Print Professional Magazine, New View, March 01 2008
  12. USPS - Postage Meters
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