Monday, February 05, 2007

Pitney Bowes Still Does Not Have It

Pitney Bowes (NYSE:PBI) released impressively improving numbers. Q4 income from continuing operations is up a whopping 95%. Earnings per diluted share are up 101%. The stock is trading close to its 52 week high. It is also trading near its five year high. So is this the breakout onto new heights.

Consider the following

US Mail EBIT revenue was flat on the year as was revenue. International Mail revenue grew 10% but EBIT revenue retreated by 2%. Together these two categories account for 60% of revenues. They will also continue to dominate in the same fashion well into the foreseeable future.

The company's Chairman and CEO Michael J. Critelli points to “strategies to expand into higher growth segments throughout the mailstream have solidly positioned us to take advantage of the stability, flexibility, technology and partnerships that postal reform will bring. We are focused on the many growth opportunities available to us and committed to providing end-to-end, integrated mailstream solutions for our customers."

These strategies need to kick in now. While postal reform was probably long overdue no other significant company with sophisticated distribution systems is pointing to anticipated efficiencies. Therefore why will Pitney Bowes be making more money by delivering products and services based on this change?