PBI Wins Fraud Lawsuit - Analyst Blog
March 26 2013 - 11:03AM
Zacks
Recently, Pitney Bowes Inc. (PBI) won the 2007 security fraud
lawsuit. As per the lawsuit, Pitney was accused of not
disclosing material facts and that resulted in missing the
financial projections in 2007. The U.S. District Judge
Vanessa Bryant in Hartford, Connecticut, announced that Pitney had
used appropriate and required cautionary statements to signal
possible business threats and risks.
The accusation was filed in the month of Oct 2009 by the
Laborers' Pension Fund of Central and Eastern Canada. The
allegation was against certain executives of the company who were
well aware of the potential threats, but did not communicate those
to the common investors.
The prosecutors mentioned that this falsification was made
during the months of July 2007 to October 2007, at the end of which
the company reported disappointing results on Oct 29, 2007.
As per the results of the second quarter of 2007, management
projected GAAP EPS in the range of 68 cents to 72 cents. But the
company’s reported GAAP EPS of only 63 cents, which was far below
the outlook range.
As a result, the company’s stock price was severely affected.
The stock price declined 15 basis points, to $39.93 on October 30,
from its previous day’s closing at $ 46.99.
The main reason for the company to miss the estimates was its
inability to offer new products; which led to customer
dissatisfaction. The revenue of its US mailing segment also
declined due to weak market demand for digital analogue mail
meters. These factors were beyond the company’s capacity as they
are primarily market driven and above all did not come to the
management’s notice when the statement was made in the second
quarter of 2007. Therefore, considering all these factors, the
court ordered that the complainants failed to prove their
standing.
Pitney Bowes currently has a Zacks Rank #4 (sell), However, some
other companies that are worth looking into include
Symantec Corp. (SYMC) which has a Zacks Rank #1
(Strong Buy) and Tyco International
(TYC) and Xerox Corp. (XRX), both
have a Zacks Rank # 3 (Hold).
PITNEY BOWES IN (PBI): Free Stock Analysis Report
SYMANTEC CORP (SYMC): Free Stock Analysis Report
TYCO INTL LTD (TYC): Free Stock Analysis Report
XEROX CORP (XRX): Free Stock Analysis Report
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