What happened
Sometimes, it's better to be lucky than to be good.
Last year, seeking to stem a revenue decline, Pitney Bowes (PBI) launched a full-frontal attack on Stamps.com's (STMP) print-postage-on-your-PC business, positioning its SendPro online shipping service as a cheaper service with "3x the benefits" Stamps.com was offering. The new marketing push doesn't seem to have helped it out-compete Stamps.com, though -- Pitney Bowes's revenue was down 10% in its last quarter, and its profit dropped by 50%.
But then, a miracle happened. Last night, in the course of reporting its Q4 earnings, Stamps.com announced that it is terminating its "revenue share partnership" with the U.S. Postal Service.
Check out the latest Stamps.com and Pitney Bowes earnings call transcripts.
Pitney Bowes just got some really good news from Stamps.com. Image source: Getty Images.
So what
Stamps.com is shifting its focus toward selling postage for non-USPS shippers such as FedEx, UPS, and Amazon here in the U.S., and toward still other shippers abroad. In so doing, it appears likely to leave a lot of USPS money on the table -- money that Pitney Bowes should now be free to pick up.
Now what
It remains to be seen whether Pitney Bowes will wholly succeed in moving in on turf that Stamps.com has voluntarily vacated, but I'd have to say its chances look good. Recently jilted, the USPS can't be too happy with Stamps.com right about now, and it should be very amenable to giving Pitney Bowes good terms on any agreements it might seek in order to pick up the slack.
With Pitney Bowes' stock trading for a bargain-basement 7 times earnings, Stamps.com shareholders' losses today look like Pitney Bowes investors' gain.
