Pitney Bowes leaders describe global business opportunities

Dramatic changes in technologies, regulations and customer preferences are reinventing the global mailstream, and the top management of Pitney Bowes Inc. said today this means new growth opportunities for the 87-year-old company.

President and Chief Operating Officer Murray Martin, who becomes Pitney Bowes’ new CEO on May 14, told investors and analysts that the growth strategies that were put in place several years ago are working, and the company remains committed to expansion in the fastest-growing segments of the global mailstream.

“Over a quarter of our total revenue comes from businesses acquired since 2001, and the growth rate for these businesses is roughly double the growth rate for the businesses we were in when we began,” Martin said. “We think that the new businesses could constitute more than 50 percent of our revenue by the end of the decade.”

Martin outlined six strategic priorities for Pitney Bowes: maintain and grow the company’s healthy cash flow; increase value delivered to customers; improve operating efficiency; solidify the performance of the core mailing business; expand internationally; and focus on high-growth areas of the mailstream.

Customers, Martin noted, are beginning to find additional value in a broader relationship with Pitney Bowes. Cross-selling of the company’s products is expected to continue to grow by double-digit percentages in the years ahead, according to Martin.

Looking at high-growth segments of the mailstream, Martin said that software is a rapidly-expanding frontier in which Pitney Bowes is becoming a larger player. The company recently acquired MapInfo to increase its presence in location intelligence, which complements Pitney Bowes’s traditional strength in address quality and, Martin said, “is emerging as an important element for business and governments that use spatial information to make better decisions on targeting offerings, serving customers, assessing risk and managing assets.” Martin also emphasized the company’s growth opportunities in mail services and marketing services.

Chairman and CEO Michael Critelli, who becomes Executive Chairman on May 14, spoke of the changing postal environment in the United States and Europe as singular opportunities for Pitney Bowes to accelerate its growth. President Bush signed landmark postal reform legislation into law in December 2006, and Critelli noted the unique chance to redefine Pitney Bowes.

Provisions in the law create four potentially significant business opportunities for the company, according to Critelli: expanded placement of postage meters and related equipment; greater contracting opportunities with the Postal Service; higher mail volumes through the company’s mail presorting network; and greater software sales to help mailers meet more stringent address quality standards. Each of these opportunities could eventually generate tens of millions of dollars in incremental annual revenues, Critelli estimated.

“Postal reform is complex,” Critelli said, “but in the aggregate it will be highly beneficial to Pitney Bowes. It allows the Postal Service to respond flexibly to the rapidly-changing needs of senders and recipients through market-driven dynamic pricing, frequent price adjustments, and lots of product and service innovation. This is an optimal environment for Pitney Bowes.”

Postal liberalization in Europe is proceeding more slowly and on a country-by-country basis, Critelli said. He asserted that Pitney Bowes has “winning strategies” that will serve the company well in “this highly divergent” environment. These strategies include a focus on small- and medium-size business customers, partnering with national posts for cross—border mail delivery, and selling more advanced systems for online postage and self-service postal kiosks.