Facing a second straight year of losses totaling $8 billion or more, the U.S. Postal Service is facing a mounting debt crisis and has reached its borrowing limit. With $75.4 billion in operating expenses in its 2010 fiscal year against only $67 billion in revenue, the federal agency has long been operating in the red. We look at what that means for many of the companies relying on the USPS as an integral part of their business model.
USPS isn't the only game in town … except when it is
The Post Office says that unless it can meet its $5.5 billion pension payment this month, it will be in default. Several alternatives are being floated, including employee layoffs, elimination of Saturday delivery service, post office location closures, and a restructuring of employee health benefits.
But what does this mean for competitors? Sure, FedEx
Goodbye, postage meters
The company has launched several new lines of business in the past few years, including what it calls "location intelligence, marketing services, and eco-wise mail." Nowadays, you won't find the word "mail" prominently displayed on the website of the company that built itself on its ubiquitous postal machines; however, direct mail and mailing services remain a large part of its business. Pitney Bowes recently signed several large third-party mailer agreements representing more than 1,500 companies that send out billions of pieces of mail annually.
Hello, anyone who will give me a movie online
Netflix built its business on DVDs by mail, but the company is making strides to dominate the streaming field -- one that already has some strong players, including Hulu and Amazon.com. Even DISH Network's
A birthday poke just isn't the same
Birthday wishes sent on Facebook don't have quite the same effect as a good old-fashioned card. A condolence sent by text isn't very consoling at all. And even though I live predominantly in the digital domain, I still have a fondness for holiday greetings that arrive the old-fashioned way.
Neither snow nor heat nor gloom of night … nor collapse of the Postal Service
Will these companies, and others that rely on the Postal Service for delivery, cease to exist if the USPS does? Probably not. But signs that a company is struggling with its delivery options include higher prices on goods and services, as well as shipping; incentives to sign up for virtual correspondence; and delays in delivery.
The downturn at the Postal Service is just the beginning. Check out our special free report, "The Only Stock You Need to Profit from the NEW Technology Revolution," to make sure your portfolio is prepared for what's coming next.
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Fool contributor Molly McCluskey loves getting birthday cards but does not own shares or hold leadership positions in any of the companies mentioned. The Motley Fool owns shares of United Parcel Service and FedEx. Motley Fool newsletter services have recommended buying shares of FedEx and Netflix as well as buying puts on Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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