Pitney Bowes (PBI): Q3 EPS of $0.47 misses by $0.02. Revenue of $1.2B (-6.5% Y/Y) misses by...


Pitney Bowes (PBI): Q3 EPS of $0.47 misses by $0.02. Revenue of $1.2B (-6.5% Y/Y) misses by $60M. (PR)
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Comments (4)
  • Greg sharp
    , contributor
    Comments (2) | Send Message
     
    The revenue drop is disconcerting but they are still keeping the EPS inline with historical levels. Does anyone know how well their new digital products are doing?
    2 Nov 2012, 02:15 AM Reply Like
  • mikeurl
    , contributor
    Comments (733) | Send Message
     
    Software had been their shining star for a while. But this quarter it stumbled badly. EBIT in software went from 17 million in Q32011 to 1 million in Q32012. They are explaining that by saying austerity in Europe is delaying contract signings. Obviously any time you see a drop that large in the future of the business you have to be concerned.

     

    They have also pushed back the launch of Volly two times now. It was supposed to launch in early 2012, then it was late 2012 and now it is early 2013. I get that they need a critical mass of billers to sign up but I'm distressed that they keep underestimating how long that is going to take. In fact they mentioned on the call they are not expecting serious Volly revenue until around 2014.

     

    It is worth mentioning that their "gross margin" deteriorated. It went from 14% to 11%. The bottom line net income figure is all distorted by tax provisions so it isn't all that useful. Basically the only thing that worked this quarter was production mail. Just about everything else was really bad.

     

    It sounds to me like they are hoping for both a seasonal pickup and an improvement in the world economy to rescue Q4. It could work out for them that way. If you look at something like the Baltic Dry Freight index as a measure of world trade you can see it was collapsing all through the 3rd quarter and then recovered sharply starting mid-September.

     

    http://bloom.bg/Tqtksq

     

    I really want to see their statement of cash flows but it hasn't been posted yet.
    2 Nov 2012, 01:36 PM Reply Like
  • Theodor Trampe
    , contributor
    Comments (26) | Send Message
     
    So the question is, do you think this ageing company can reinvent itself?

     

    On the financial side, it's looking pretty interesting. With 30% short/float and a 12% dividend yield, it seems like there's gotta be some short covering in the next couple of months. I certainly don't think the stock can get hammered that much more considering analyst and company guidance.
    4 Nov 2012, 05:42 PM Reply Like
  • mikeurl
    , contributor
    Comments (733) | Send Message
     
    Up until last quarter things looked really promising. Their software business was growing quite well. However, obviously that wasn't the case in Q3. Also, their biggest online project is now delayed at least twice. These aren't bullish signs.

     

    Also, i got a look at their cash flow and it is OK. They retired 550 mil in debt this year and decreased their total cash from ~700 mil to ~400 mil. That isn't bad. But the capex + dividend payment has exceeded net income so far for 2012. Not by a lot but if that trend were to continue it would mean an eventual cut of one or the other (or both).

     

    They still have breathing room because 400 mil in cash is a lot of money. But frankly they are running out of time. Lastly Q4 probably will be partially disrupted by Sandy.
    5 Nov 2012, 03:27 PM Reply Like
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