Pitney Bowes – Chairman & CEO Interview
BECKY QUICK, CNBC ANCHOR: Next year is looking a whole lot greener for the U.S. Postal Service. An overhaul bill passed through the Senate over this last weekend. And that is set to relieve the Postal Service of billions of dollars in retirement expenses and keep the cost of postage down. Of course, the president still needs to give his stamp of approval on this whole thing. So let`s get into what is at stake for business with Michael Critelli. He is the chairman and CEO of Pitney Bowes.Michael, thanks for being with us today.
MICHAEL CRITELLI, CHMN. CEO, PITNEY BOWES: You are very welcome, Becky.
QUICK: You know, we have heard a lot about this bill that is out there. What is it actually? What would it do? And what does it mean for business?
CRITELLI: Well, you know, we are in a USD900 billion industry that employs 10 million Americans. It stabilizes the Postal Service financially by fixing and funding its retirement obligations. It sets an annual cap on price increases of the CPI, the consumer price index. And it gives the Postal Service the same ability that we are used to with utilities, airlines and other people, promotional rates, off-peak rates, discounts for other benefits to promote the use of mail, all of that that is now possible, that just wasn`t possible under the old law. And that will start to go into effect in 2008.
QUICK: What have the increases been over the last decade? It seems like I have got a new increase coming every year, but is that just my imagination?
CRITELLI: Well, that — the problem with the current law is it encourages a situation where you have no increases for a couple of years and then you will have a shock of an 8 or a 10 percent increase in year three. People tend to get discouraged using the mail when that happens. Having more predictable, slower rates of increase is going to definitely help the system for mailers. You don`t want to have to absorb a 10 percent increase, for example, if you are a magazine publisher. And that kind of thing just going to go away. So all of us are going to see a much more favorable environment for the magazines and newspapers that we subscribe to.
QUICK: If this is such great legislation, why did it take three years to get through Congress?
CRITELLI: It actually took 11.5 years.
QUICK: Eleven-and-a-half? Why did it take so long?
CRITELLI: I — there are so many social, political, and economic interests that are at stake when you change a postal system. And again, you are talking about 9 million American jobs and a USD900 billion industry. It is a very complex institution and I commend the lawmakers, particularly Senator Collins and Carper and Congressman Davis and Waxman, and our own Senator Lieberman here in Connecticut, as well as the administration to make this happen in the waning hours.
QUICK: So you are thanking the administration. I guess you are assuming the president will go ahead and sign off on this?
CRITELLI: I believe that will be the case.
QUICK: You know, while we have you here, we were talking about mail, but your company obviously is a lot more than just mail. You also do things like provide the servers for eBay (EBAY) and for Amazon (AMZN), and for a lot of the things that are going there. You must have a pretty good read on what is happening this holiday season.
CRITELLI: Well, we see good mail volumes, both in the marketing mail space and in the packaged space. Over time, of course, first class mail slowly declines, but marketing mail, catalogs in particular, just keep growing. And people are sending more packages than ever because of e-commerce.
QUICK: Yes, I was going to say, with online shopping, you must see a surge with that. Some people are saying a growth of 25 percent expected this year. Does that sound about right with what you are seeing?
CRITELLI: Yes. Online shopping and particularly online auctions are growing at that kind of rate, and in some instances for specialty items, even more
