What happened

Shares of Pitney Bowes (PBI 5.21%) plunged more than 19% on Wednesday after the corporate shipping specialist reported first-quarter earnings that fell short of estimates, raising new doubts about the effectiveness of the company's turnaround strategy.

So what

Before markets opened on Wednesday, Pitney Bowes reported first-quarter adjusted earnings of $0.12 per share on revenue of $868 million, compared to analyst expectations for $0.21 per share in earnings on sales of $866 million. Revenue fell 3% year over year, or 2% on a constant currency basis.

A hand pounds the table next to a tablet showing a declining stock chart.

Image source: Getty Images.

The company's commerce services revenue was up 5% year over year, to $401 million, while small- and medium-business solutions sales fell by 10% to $393 million, and software solutions fell 4% to $73 million.

Shares of Pitney Bowes have lost more than 70% of their value over the past three years. The company is attempting to move away from its traditional business of mail metering and production mailing, which was lucrative but diminishing, and toward e-commerce shipping.

As part of the process, Pitney Bowes has divested a number of legacy units focused on document management and production mail. Company CEO Marc Lautenbach said in a statement accompanying earnings that although the results aren't satisfactory, he still believes in the transformation plan.

"Clearly, we are not pleased with our profit performance, but are confident that the actions we are taking will improve profitability and continue to position us for sustained growth for the long-term," Lautenbach said. "We continued to make progress against our long-term objectives as we move our portfolio of business to the growth areas of the market."

Now what

It's worth noting that commerce services, the direction Pitney Bowes wants to head, was the largest component of overall revenue for the second consecutive quarter. Overall shipping-related revenue accounted for about one-third of total sales.

The issue for Pitney Bowes is that even if its pivot to e-commerce is the right move, it's heading into a crowded field that likely will be a lot less lucrative than the legacy business was. The company in February cut its quarterly dividend to $0.05 per share from $0.1875 per share, giving investors one less reason to hang on and see how the transformation plays out.