Alaska’s bypass mail program has been identified as one of five major cost burdens to the U.S. Postal Service, according to an inspector general’s report.
“Current estimates of the annual direct loss to the Postal Service are 50 million USD to 60 million USD,” according to the June 22 report to Postmaster General John Potter.
Read MoreBull today announced that it has acquired the former Firstlogic, Inc. postal automation software business, based in La Crosse, Wisconsin, from Business Objects Americas. Business Objects retains the former Firstlogic data quality business. In addition, Business Objects retains the former Firstlogic Commercial Mail division, which develops software to support direct and commercial mail printers, publishers and distributors.
Bull’s subsidiary, AddressVision Inc., will provide Postal Automated Software Solutions for Government and Commercial Delivery Companies in the U.S. and abroad.
Read MoreThe U.S. Postal Service is seeing a 2.6 percent response rate from a direct mail campaign started in June to help direct mail marketers in their struggle to sell the concept to their constituents.
Despite reaching out more to the marketplace in the past few years, the postal service has focused on ad agencies and advertisers in big companies, said Rod DeVar, USPS national manager of advertising and promotions.
“We had stayed away from people in the direct marketing industry because we felt we needed to influence, change minds and create a presence in the mind of the advertiser and the agency about how direct mail could fit into their communications mix,” he said.
Read MoreUSPS to the BOG relating to PFY 2006
Read MoreYRCW pre-reported to the upside. Yesterday morning, YRCW pre-reported 2Q EPS in the range of $1.49-$1.54, ahead of Consensus $1.46 and our $1.42 estimate. Excluding a $0.04 loss from reorganization costs and gains on property sales, the new guidance range is $1.53-$1.58, but given YRCW’s continued charges, we do not exclude these losses and we don’t believe consensus excluded them either.
Upside driven by strong industrial economy and regional pricing. The company indicated volume and costs are on plan and yields provided the outperformance, especially from regional operations. Still, the midpoint of the new guidance range is just 3.8% ahead of the current consensus.
Raising 2Q EPS estimate. We are raising our 2Q EPS estimate to $1.54, the high end of mgmt’s guidance including charges and gains on sales, from $1.42, bringing our full year 2006 estimate to $5.23 from $5.11.
The near term environment is positive for LTLs, but operating leverage could be negative if the economy slows. The LTL group is likely benefiting from strength in the industrial sector and high fuel prices. This is also likely to benefit the near term outlook for ABFS, CNW, and ODFL, but for investors concerned about a slowdown in 2007, we note the risk of operating leverage swinging the other direction. Still, we expect a stronger industrial economy than consumer going forward.
YRCW has been extremely inconsistent in achieving guidance. Mgmt has pre-reported 3 of the past 4 quarters, with the prior two to the downside. We expect this volatility to continue because we think the company will continue to struggle operationally, particularly in the regional LTL business. Given the near term economic strength and low end valuation, we expect YRCW to remain in a trading range around $40 near term, and our rating remains Peer Perform.
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