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AnonymousInactivePitney 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. -
AuthorNovember 19, 2007 at 11:43 AM
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