PBI Pitney Bowes Inc

Pitney Bowes Inc. (PBI) announced the sale of Pitney Bowes Print+ Messenger Color Inkjet System to Wilen Direct.  Known for delivering innovative services, Pitney Bowes provides software, hardware and services that assimilate physical and digital communications channels. Through this sell off, Pitney is helping Wilen Direct in expanding its business through highly developed customer communications management.

Florida based-Wilen Direct is an operating affiliate of the Wilen Group, a full service direct marketing services provider. The company leads in personalized direct marketing, digital and variable data imaging, highly developed mail strategies and technologies, logistics, and fulfillment. The Wilen Group has generated its business over the past 35 years and has a large array of Fortune 100 clients.

The acquisition of the system by Wilen would generate customized four-color envelopes for Wilen’s clients, which will help in marketing and customer communications campaigns. Using the new Inkjet System, all basic information, including personalized marketing messages, mailing and return addresses, company logos, four-color graphics, and postal barcodes will be printed directly on various array of envelopes during high-speed mailing. This, in turn, reduces the need for envelope conversions or inserting materials for the company.

Previously, this Inkjet system was formed after Pitney partnered with inkjet printing technology leader Hewlett-Packard Company (HPQ) and provided sophisticated, 100% variable data printing on envelopes in full color. Therefore, Wilen will be able to attract more clients with innovations and new technology while having an edge over its competitors in the market.

Earnings Recap

Pitney reported second quarter earnings from continuing operation of 52 cents per share, which was a penny above the Zacks Consensus Estimate and was up 7.7% year over year. Total revenue was $1.3 billion in the quarter, an increase of 1% year over year. The top line included a 3% benefit from foreign currency translation.

In addition, the company witnessed continued growth in equipment and software sales during the quarter. This was partially offset by declines in recurring revenue streams and supplies, rentals and financing, which declined 3% year over year.

The company believes that it is poised to deliver solid performance in the long term and achieve solid profitability based on its strong product portfolio. Pitney is benefiting from its Strategic Transformation program, helping it to effectively provide new products and services.

Pitney is a leading supplier of products and services in most of its business segments. Its meter base and its ability to place and finance meters in key markets contribute significantly to its revenue and profitability. However, all segments face competition from a number of companies.

We believe that its vast experience and reputation for product quality, as well as its sales and support service organizations, are important factors in influencing customer choices with respect to its products and services.

However, many of Pitney contracts are with government entities. Government contracts are subject to extensive and complex government procurement laws and regulations, along with regular audits of contract pricing and business practices.

Pitney shares have a Zacks #3 Rank, which translates into a short-term Hold recommendation. Moreover, considering the fundamentals, we are maintaining a long-term Neutral recommendation on the stock. A major competitor of Pitney -- Siemens Inc. (SI) also retains a Zacks #3 Rank.

 
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