Pitney Bowes outlines growth strategies for investors
Thursday, May 13, 2010
Press release from the issuing company
Stamford, Conn. - Pitney Bowes Inc. is planning for growth by emphasizing focused strategic approaches to its two main customer segments.
For small and medium-size organizations, which are primarily users of Pitney Bowes's core mailing products, Pitney Bowes is investing in new web-based services to complement existing equipment-based offerings. And for larger enterprises, Pitney Bowes is creating higher-value offerings beyond its core mailing business in areas such as secure transactions, customer communications management, and records and information management.
Chairman, President and CEO Murray Martin and Executive Vice President and Chief Financial Officer Mike Monahan outlined these strategies in a half-day conference with institutional investors and financial analysts in New York City. A recording of the event and related information is available on the Pitney Bowes website at www.pb.com/investorupdate.
Martin also announced that the company's Board of Directors yesterday approved an expansion of the company's share repurchase authorization to $150 million.
"One of the fundamental strengths of our business is our trusted brand, the size of our customer base, the diversity of customers we touch, and the range of solutions we have for those customers," Martin said. "An understanding of the distinct profiles of our customer segments and their opportunities will provide a much clearer view of our performance today as well as our future growth opportunities."
The small and medium-business segment, with nearly two million customers, generated just over half (53%) of Pitney Bowes's $5.6 billion in revenue in 2009. Pitney Bowes plans to deliver an increasing number of web-based or web-enabled services to this segment globally. Martin pointed out recent examples of such offerings, such as the Connect+ Customer Communications Series, a web-enabled mailing system through which users can download or access web-based programs to create higher-value mailings.
Other examples that are either in the market or in the development pipeline include e-commerce shipping solutions, online targeted marketing services, a website where companies can design, print and mail customized communications, and other solutions.
The enterprise segment, which generated 47% of Pitney Bowes's revenues in 2009, has a focus in a few specific industries: financial services and insurance, telecommunications, and government. For this segment, Pitney Bowes is investing in new solutions to tap the greater growth potential among enterprise customers.
For enterprise customers, Pitney Bowes is interested in three clusters of opportunity. The first is secure financial transactions, a $70 billion global industry growing around 9% per year. Martin said that Pitney Bowes has provided trusted third-party secure transactions since its founding, and currently handles more than $25 billion per year in postage payments. The company is looking to extend this offering by expanding deployment of postal kiosks, and penetrating more markets with online payment systems for e-commerce transactions and cross-border sales and shipping.
The second cluster of opportunity is in customer communications management, a $50 billion global market also growing approximately 9% per year. As customer communication evolves into an increasingly multi-channel experience, Martin said Pitney Bowes is well-positioned to help companies bridge physical and online communications channels. By way of example, he noted the introduction last year of the Pitney Bowes IntelliJet Printing System, a high-speed, color digital printing system that integrates with Pitney Bowes mail finishing equipment and online document technology. The company also provides software and expertise on customer segmentation and location, critical elements to successful customer communications.
The third cluster of opportunity is in records and information management, a $46 billion market growing approximately 8% annually. Pitney Bowes's current and emerging offerings in this market help large firms store, manage, transform and securely destroy records and information, as needed. For example, one of France's largest financial services firms already uses Pitney Bowes to handle the ten million invoices it receives annually. Pitney Bowes scans the physical invoice into digital form, and then reformats and categorizes each invoice so that it drops into the customer's internal systems ready to be acted upon. This solution improves the speed, accuracy and tracking of an extremely high volume of inbound mail.
Monahan also provided an update on the company's Strategic Transformation program, which he said is progressing. The program will better position the company to take advantage of growth opportunities and make its operations more efficient. As the company fully realizes the program's benefits, it is targeting average annual long-term revenue growth of 2-5% and earnings before interest and taxes (EBIT) growth of 6-8%, assuming normal economic conditions.
"We believe that our growth strategy coupled with our transformation process will enable us to be a stronger and more profitable company, with enhanced ability to deliver sustainable customer and shareholder value," Martin said.
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