Pitney Bowes Disappoints in 3Q - Analyst Blog

Pitney Bowes Inc . ( PBI ) reported third-quarter 2012 GAAP earnings per share of 38 cents, 20.8% lower than the Zacks Consensus Estimate of 48 cents and down a significant 55.3% from the prior-year earnings of 85 cents.

Non-GAAP earnings (excluding the one-time items) were 47 cents a share, missing the Zacks Consensus Estimate by a penny and down 31.9% on a year-over-year basis. Profits during the quarter were affected by the continued global weakness primarily in the International Mailing and Software.

Total Revenue

Total revenue was down 6.5% year over year to $1.22 billion, as a result of weak global economic conditions, which mainly affected the International Mailing and Software and Management Services business segments. On a constant currency basis, revenue contracted 5%, partially offset by equipment sales growth in Production Mail and 3% growth in presort revenue.

The company reported revenue contraction across all its segments.

Segment Performance

Small and Medium Business (SMB) Solutions segment sales declined 8% year over year on a constant currency basis to $602 million, as a result of a 6% fall in North America Mailing revenue and a 13% decline in International Mailing revenue.

Enterprise Business Solutions segment sales fell 5% year over year to $614 million, due to a 19% decline in Software revenue, 6% drop in Management Services, 1% dip in management services and 4% fall in Marketing services. This was partially offset by a 12% growth in the Worldwide Production Mail.


Pitney Bowes incurred total SG&A expense of approximately $400.8 million in the quarter versus approximately $427.4 million in the third quarter of 2011. R&D expense was $36.7 million versus $35.6 million in the year-ago quarter. The company's income from continuing operations was $107.6 million compared with $99.8 million in the prior-year period.

Balance Sheet

Cash and cash equivalents were $424.8 million with long-term debt of $3.3 billion and shareholder's equity of $124 million at the end of the quarter.


The company reiterated its 2012 guidance. GAAP earnings from continuing operation are expected to be in the range of $2.22 to $2.42 per share, including net tax benefits of 11 cents per share and benefit from the sale of leveraged lease assets in Canada of 6 cents per share. Excluding these, adjusted earnings per share from continuing operations are projected in the range of $2.05 to $2.25. Revenue growth, excluding the impact of currency, is expected to be down 2% to up 2% year over year. Free cash flow for 2012 is expected to be in the range of $700 million to $800 million.

Pitney Bowes Inc. is the largest provider of mail processing equipment and integrated mail solutions in the world. It offers a full suite of equipment, supplies, software and services for end-to-end mailstream solutions, which enables its customers to optimize the flow of physical and electronic mail, documents and packages across their operations. A major competitor of Pitney Bowes is Siemens Inc . ( SI ).

We currently maintain our long-term Neutral recommendation on Pitney Bowes Inc. and a Zacks #2 Rank (Buy rating) over the short term.

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SIEMENS AG-ADR (SI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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