|
|
|
Pitney Bowes
(NYSE: PBI)
1 Elmcroft Road, Stamford 06926
203-356-5000
Fax: 203-351-683
Chairman and CEO:
Michael Critelli, 51
Employees: 32,500
Revenues (2000): $3.9 billion
Earnings: $563 million
|
Business New Haven
3/5/2001
By: Mitchell Young
|
In October 1999, E-Stamp Corp. (NASDAQNM: ESTM) was trying to make a mint by providing businesses with the opportunity to purchase stamps over the Internet. E-Stamp's stock came public - and within a month the company had a $1.6 billion market cap.
As in numerous other similar instances, investors thought E-Stamp and the Internet had the mighty Pitney Bowes monopoly (the company has about 85 percent of the postage-machine business) in its “sites.”
Pitney's investors got very nervous very fast and abandoned the company after what had been a powerful two-year run for its stock. In December 1997 it was trading at around $20 share, and had reached nearly $70 by the end of 1999.
In January 2000 the stock cracked under the load of Internet hype and dropped more than 40 percent to about $41 per share.
By the millennial year's end the stock had virtually crashed to $24 per share. But this time, however, neither E-Stamps nor the Internet could be blamed. E-Stamps was flaming out like a shooting star crashing through the floor of the NASDAQ. Its market cap plunged from $1.6 billion to less than $5 million today - and its revenues are lower than many Mail Boxes Etc. stores.
Pitney's powerful mail-related brand masks a good deal of what the company actually does. It provides mailing and integrated logistics (postage meters, mailing equipment and shipping logistics), office solutions (copiers, fax machines and facilities management), and capital services (large-ticket financing for a broad range of commercial and industrial markets).
In early December the company decided to spin off its Trumbull-based Office Systems. Pitney Bowes shareholders will receive 100 percent of the stock in the new company, which will license the Pitney Bowes moniker for now. Office Systems will continue to be headquartered in Trumbull. Pitney Bowes Office Systems will be led by Marc C. Breslawsky as chief executive officer.
On a pre-spin total company basis, Office Systems operations are estimated to contribute 14 to 15 percent of Pitney Bowes' revenues, 11 to 12 percent of EBIT, and 11 to 12 percent of net income for the full-year 2000.
Explained Michael J. Critelli, chairman and CEO of Pitney Bowes Inc., “As separate entities, we can leverage the core strengths of each respective company and sharpen the focus on the growth opportunities in our designated markets, while maximizing speed and enhancing responsiveness to changing customer and competitive conditions.” With this transaction the company exits a very competitive market.
The company reported year-end results in mid-January. Including discontinued operations, fourth-quarter net income for 2000 was $148.3 million, and diluted earnings per share was 59 cents.
Full-year income from continuing operations was $563.1 million, and diluted earnings per share from continuing operations was $2.18. Fourth-quarter revenue fell five percent to $978 million, while full-year 2000 revenue grew by two percent, to $3.9 billion.
Free cash flow in 2000 was more than $600 million. During the quarter, the company repurchased approximately 4.3 million shares, bringing the total 2000 share repurchase to 17.2 million shares and completing the current board authorization for share repurchase. The board has authorized an additional $300 million for stock repurchases.
Pitney Bowes' global reach and broad market penetration appear to give it plenty of options going forward. The company's high-end products include document-management and messaging systems.
Pitney's Internet scare seems to have gotten the company moving in some other new directions as well. Pitney Bowes launched a PitneyB2BCapital product suite of financial solutions one year ago this month. Its flagship product, Pitney Escrow, provides e-marketplaces with a secure online payment system.
The company appears to be watching its flanks as well, announcing an agreement with Dell Computer to provide Internet-enabled solutions to small-business owners. Available this quarter, the computers will allow small-business owners to print postage from their desktops.
With $600 million of cash flow and no paradigm-shifting competitors on the horizon, the options seem to belong to Pitney Bowes. The stock has recovered from its $24 low to about $35 a share - still well off its $54 high. Both USB Warburg and Salamon Smith Barney have recently upgraded the stock, with Salamon reversing an October downgrade.
|
Go FirstGo PreviousGo
NextGo LastGo
to Index
|
|
