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Why Pitney Bowes Inc. Shares Plunged Today

By Brian D. Pacampara, CFA – Feb 2, 2016 at 12:32PM

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The mailing-equipment specialist fails to deliver on any transformation traction.

What: Shares of communications technologist Pitney Bowes (PBI -8.30%) were down 10.3% at 10 a.m. ET on Tuesday after its quarterly results and outlook missed Wall Street expectations.

So what: Pitney Bowes shares have slumped over the past year on concerns that its mail-equipment segment is in secular decline, and today's poor Q4 results -- EPS of $0.48 missed the consensus estimate by $0.05 on a revenue decline of 4.8% -- coupled with downbeat guidance only reinforce those worries. In fact, revenue in its small and medium business solutions segment -- comprised of North America and international mailing -- sank 6%, while production mail revenue declined 9%, giving analysts plenty of negative vibes over its growth prospects going forward.  

Now what: Management now sees full-year 2016 EPS of $1.80 to $2.00 on revenue of $3.54 billion to $3.65 billion, versus the consensus estimate of $2.03 and $3.6 billion. "We made substantial progress against our strategic objectives in 2015 and entered 2016 in a stronger position," said President and CEO Marc Lautenbach. "As we look forward, we continue to feel good about where we are in our transformation and our ability to deliver long term value to our shareholders." When you couple Pitney's still-hefty debt load with the strong secular headwinds facing its business model, however, I wouldn't bet too heavily on that turnaround talk just yet. 

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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