Pitney Bowes Inc. has hired a consultant to help it identify areas for further cost cuts while improving efficiency, as the company”™s CEO said a hoped-for rebound in mail volumes has yet to materialize in the recession.
Pitney Bowes is one of the largest employers in Fairfield County with about 3,000 local employees at last report. The Stamford-based company sells machines to prepare mailings and also manages mail and document rooms on behalf of corporate clients.
In the second quarter, Pitney Bowes revenues sagged 13 percent to under $1.4 billion, but the company still produced a $117 million profit.
Pitney Bowes”™ troubles date back two years, after it misjudged demand for mailing machines and services following a hike in U.S. postal rates in May 2007, just as Murray Martin was promoted to replace retiring CEO Michael Critelli.
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Since November 2007 when Martin launched a corporate restructuring, the company has slashed more than 2,600 jobs while cutting more than $108 million in severance checks to terminated employees.
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With the recession further dampening corporate mass mailings, Pitney Bowes continues to see revenue decline.
“In the first quarter we had expected a stabilization in mail-intensive industries for the balance of the year,” Martin said, in a conference call with investors in late July. “However, in the second quarter we have seen deeper and more protracted mail-related business contraction.”
Martin indicated the company has tapped most of the low-hanging fruit in terms of cost cuts, and now needs to undertake a more strategic look at the business.
“I think that we have done a very good job at looking at how to improve our overall independent business unit structure,” Martin said. “What we”™re looking at is a more overarching look at the business and the structure, and how we can look at better functionality across all businesses. And we believe it is beneficial to have a third party look at it without a preferred view, and bring us ideas and thoughts from the outside.”
For its part, the Postal Service lost $1.9 billion in its second fiscal quarter ending March 31, as revenue dropped 10 percent to $16.9 billion. The Postal Service has attempted to spur corporate business through summer sales for bulk mailers.
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“They”™re focusing on the high-volume mailers and looking to provide breaks there to generate the volume,” Martin said. “The small-piece mailers would have less effect on the overall volume. It”™s really in the promotional mail, which has significant decline, as well as mainly in the financial services sector. So they”™re trying to stimulate that with a series of promotions, but those are very early on as to what the reaction and take rate will be.”
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Even as it does so, the Postal Service itself is readying for a massive restructuring that will close many small branch offices nationwide, including some in Fairfield County, as well as renegotiating contracts with major suppliers.
Martin said he expects sales to pick up for self-service kiosks sold by Pitney Bowes, as mail patrons look to cut soon-to-be-longer trips to the post office. And Pitney Bowes hopes its software unit in Troy, N.Y., will continue to diversify its revenue base ”“ this past June, the company awarded its innovation prize to a team of researchers from MapInfo, the company Pitney Bowes acquired in 2007.
