In an earlier interview with Seeking Alpha, we outlined our concerns with the secular and cyclical headwinds facing Pitney Bowes:
The nostalgic image of the U.S. postman has quickly become old-fashioned. Mailing volumes worldwide have been stagnant since the new millennium – substitution of electronic forms of communication via the internet is an inevitable process in the long run. Personal mail has steadily migrated to email, text and social-networking sites just as news has shifted from print to desktops (i.e. WSJ to Seeking Alpha). The Great Recession has simply expedited this transformation, as companies have slashed direct-mail budgets and embraced the internet to reduce costs and maintain margins. The disruption to PBI’s largest customers (i.e. financial services, retail, etc.) has fundamentally changed many of these business models. Corporations are encouraging customers to do more business online and are increasingly sensitive to demands for “going green” resulting in reductions in printed material.
The Economist recently provided investors with an updated look into America’s Struggling Postal Service. The USPS says it will lose nearly $8 billion this year and as much as $238 billion by 2020 unless big changes are made. Apparently, not much has changed since our initial industry comments.
Source: The Economist
Disclosure: At the time of publication, the author was short shares of Pitney Bowes, although positions may change at any time.
Disclosure: Short PBI