mikeurl's  Instablog

I guess the management of Pitney Bowes thought enough was enough as their share price dipped down to levels not seen since the late 1980s. Today a flurry of form 4's were posted to the PB investor relations site.

By far the largest buys were by Chairman, president and CEO Murray Martin who bought 20,000 shares on 5/21/12 for between 13.55 and 13.56 per share. Altogether the purchases by insiders yesterday and today total $437,806.50. This is a significant buy at a time when the stock is under extreme duress.

I was right there with them buying more at 13.50 and then more at 13.00 and I had a buy in for 12.50 that never got filled. PBI is surely not without risk but I think the reward of a double digit dividend more than compensates for the risk/reward ratio here. It looks like management agrees.

Edit: Since posting this another insider buy was made on 5/25/12 bringing the total up to 472,081.50

Disclosure: I am long PBI.

Additional disclosure: Nothing written is intended as investment advice.

Marc Benioff was on Bloomberg on 8/30/11 talking to Emily Chang. He compared his focus on the top line of Salesforce to the way that Oracle was run in 1994 when he worked there as a Vice President.  In short he compared his business to Oracle's and his leadership to Ellison's.  But is that a valid comparison?

This is what Oracle's profit margin looked like leading up to 1994 and one year after:

1992 - 5.3%
1993 - 6.5%
1994 - 14.2%
1995 - 14.9%

And here is what the profit margin looks like for Salesforce.com leading up to 2011:

2007 - 2.5%
2008 - 4.0%
2009 - 6.2%
2010 - 3.9%

Personally I don't like companies that have to "buy" customers by operating on very small profit margins. Salesforce is running on a profit margin that would be more appropriate for a supermarket than a high tech company with in-demand services. Marc has the instincts of a salesman and he can certainly build excitement. But I'd steer clear of CRM until they show they can ratchet up profit margins--and soon. The top line can't make up for the fact that their competitors have, in some cases, 7-8 times the profit margin of Saleforce.com. In that environement capital will eventually flow away from the low margin business to the higher margin one.

By the way, Oracle's most recent profit margin was 30%.  This compared to Salesforce's most recent profit margin of -1%.  Yes, that is minus 1%.


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.