PITNEY BOWES TO CUT 1,500 JOBS
PITNEY BOWES TO CUT 1,500 JOBS
2007-11-19 at 11:39:00 am #21025
Pitney Bowes to Cut 1,500 Jobs
HARTFORD, Conn. — Not without pain, Pitney Bowes Inc. is beginning the final leg on its race to all-digital and computer-networked equipment.
The Stamford-based mail and document-managing company announced Thursday it will take a charge of between $300 million and $400 million that include costs to write off inventory and leases of discontinued equipment. And it will cut 1,500 jobs, about 4 percent of its work force, as it outsources manufacturing work and streamlines management.
Pitney Bowes, which began its shift to digital mailing technology in 2002, is reacting as much to changes in the U.S. Postal Service on which its business relies as to technological advances such as Internet mail tracking, Web-based postage sales and computer networks.”Our products can help postal operators enhance their operating efficiency, move lower value transactions away from the postal counter and support the increasing flexibility in pricing structures characteristic of postal reform and liberalization,” Murray Martin, president and chief executive, said in a conference call with analysts.The move is the latest for a company that traces its beginnings to 1901, when inventor Arthur Pitney developed a postage stamp machine, and seven years later when businessman Walter Bowes brought to post offices the first canceling machines.
Pitney Bowes, which won post office approval for its postage meter in 1920 and introduced the first mass-market postage meter in 1949, must now provide computerized metering and adjust to new postal rules that became law last year. Under new regulations, the post office must keep its rate increases at or less than the rate of inflation for first-class and standard mail and periodicals but will have greater flexibility in setting rates for parcels and Priority and Express mail.For Pitney Bowes, that means customers must have access to sufficient computer memory to accommodate rate changes and the ability to download software rather than wait for a service technician.”Our progress toward greater memory and greater capacity for digital devices has been a journey,” said Kevin Weiss, executive vice president and president of Pitney Bowes’ global mailstream solutions. “It’s not been an event by any stretch of the imagination.”
Shares of Pitney Bowes rose 16 cents to $38 Thursday.
The company also announced that it expects results between a loss of 17 cents and a profit of 4 cents per share for the fourth quarter and a profit of $1.76 to $1.97 for the year. In October, Pitney Bowes forecast net income of 66 cents to 70 cents per share.Excluding extraordinary items, the company said it still expects to earn 67 cents to 71 cents per share for the fourth quarter. Analysts expected a profit of 69 cents a share, according to a survey by Thomson Financial.Martin, without being specific, also said Pitney Bowes will consider alternatives to its U.S. management services business. The business, which brings in about $1 billion in annual revenue and employs 12,000 workers, provides mailroom and copy center services to large corporations, federal agencies and law firms.Matthew Troy, an analyst at Citigroup, said in an investor note that the management services business “remains a drag.” He said Pitney Bowes is “moving definitively to drive structural change with greater clarity” by mid-2008.The company’s announcement was a “solid first step for Pitney Bowes in rebuilding sentiment across a wider investor base in 2008,” Troy said.Analyst Shannon Cross of Cross Research said she expected some action by Pitney Bowes following disappointing third-quarter earnings last month. The company’s $127.6 million in profits was down about 16.5 percent, from $148.6 million in the same quarter last year. Per-share earnings sunk to 58 cents, from 67 cents in the third quarter of 2006.”In light of the weakening of the economic situation and uncertainty on the postal side, I’m not surprised to hear this,” Cross said.Investors have seen the mailing industry as resistant to recessions, but that changed with the third-quarter earnings, she said.