The United States Postal Service asked Stamps.com
By all accounts, the test was a popular success. A customer would provide Stamps.com with a photograph that would then be turned into a sheet of individualized stamps. The customer had to buy at least one sheet of 20 stamps at a cost of $16.99 for typical $0.37 postage. The post office got only the cost of the postage; Stamps.com received the rest. The company estimates that more than 100,000 sheets -- some 2 million individual stamps -- were ordered during the seven-week test market period that began Aug. 10.
The online purveyor of postage had asked the postal service to extend the test marketing period, but because of a well-publicized stunt by The Smoking Gun website, in which pictures of serial killers, foreign dictators, and items of dubious historical value (such as Monica Lewinsky's infamous dress) made it to print, the post office is rethinking the program. As a result, the company stopped the printing of pictures of adults and teenagers to prevent a recurrence, which admittedly makes the service somewhat less desirable, but it wasn't enough to persuade the post office to extend the program.
In true bureaucratic fashion, the postal service says it will make a decision on extending the test market within 90 days, just long enough to miss the holiday season. And it won't allow Stamps.com to continue processing orders while it reviews the program.
Stamps.com's stock had been on a tear after the program was announced, hitting a 52-week high of $17.75. Last Tuesday it closed at $12.17, down 31% from the high, but has since recovered to $14. The company will deliver 80,000 of the 100,000 stamp sheets ordered in the third quarter, delivering the balance in the fourth quarter. Revenue is recognized from the program as the product is shipped.
The company posted on its website a note announcing the end of the program and asking customers to write the U.S. Postal Service and their local congressman to keep the program going.
While there will always be pranksters trying to push the envelope, it seems overkill to end the program because of a couple of incidents of high-profile high jinks. These stamps should not be canceled.
Fool contributor Rich Duprey thinks the postal service should be canceled and privatized. He does not own any of the stocks mentioned in this article.
