Pitney Bowes in 2012: Lost in the Mail

2012 is nearing its end, and now's a good opportunity to look at what happened throughout the year to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.

Today, I'll look at Pitney Bowes (NYSE: PBI  ) . Among dividend investors, Pitney Bowes is a favorite, thanks to its S&P 500-leading dividend yield. Yet that high yield comes largely from a big decline in the company's share price. Can the company that once revolutionized the way businesses send mail pull another trick out of its hat? Below, you'll find more on what moved shares of Pitney Bowes this year.

Stats on Pitney Bowes

Year-to-date stock return

(35.3%)

Market cap

$2.17 billion

Revenue, past 12 months

$5.06 billion

Net Income, past 12 months

$611 million

1-year revenue growth

(5.8%)

1-year net income growth

40%

Dividend yield

13.7%

CAPS rating (out of 5)

***

Source: S&P Capital IQ.

What crushed Pitney Bowes this year?
Pitney Bowes dominated its industry for decades, with its postage-meter mailing machines an omnipresent staple of corporate mailrooms. But lately, the company has suffered from a reduction in mail volume, and its annual earnings have shrunk this year and are expected to drop again next year.

One obvious place to look for an explanation is the rise of online postage services. Stamps.com (NASDAQ: STMP  ) and Newell Rubbermaid's (NYSE: NWL  ) Endicia.com have cut deeply into Pitney's home turf. Partnerships with FedEx and United Parcel Service (NYSE: UPS  ) haven't managed to restore Pitney's sales to previous levels.

But Pitney has tried to evolve past its postage business to become a more diversified company. A recent deal with Facebook (NASDAQ: FB  ) aims to make use of Pitney's geocoding software prowess, helping to make Facebook's ad targeting more effective. Its document solutions and e-commerce services, along with analytics, marketing, and data management businesses, represent Pitney's attempt to become a one-stop shop for business customers.

In 2012 at least, Pitney's moves haven't inspired confidence among investors. Whether the company will see a better 2013 depends on how effective it is against the strong competition in the other areas it's pursuing.

Will Facebook save Pitney Bowes?
Pitney Bowes was smart to go after a partnership with the newly public social media giant, but will Facebook's strategic vision mesh well with Pitney's? Learn more about Facebook's game plan in our premium research report on the stock, which looks at whether Facebook is a buy after its post-IPO plunge and recent recovery. Access your report by clicking here.

Click here to add Pitney Bowes to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 14, 2012, at 8:32 AM, rsinj wrote:

    When posting metrics, as you've done here, it's always a good idea to look at how those numbers were derived and especially those which stand out and may require an asterisk beside them. Wouldn't you agree that an author should check his sources? Otherwise what does that say about the quality of the author's research, and ultimately his credibility?

    I'll give you a hint. Look at your table, see which number looks out of place, and then understand why you need an asterisk. Net income didn't really increase 40%. If you truly believe it did, then be prepared to report a similar decrease in net income for 2013. If you want to say 40%, then do your readers the favor of putting the asterisk with a note saying that $227 million was from discontinued (non-recurring) operations. If it were a non-recurring expense you'd be all over it tossing it out - no different for one time income boosts. That boost was significant here, amounting to $1 per share. As a result, you are misleading your readers.

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