[Engineering Feature]
Key Companies Shake Up This Year's Top Employers
It’s a tough time for the industry, but several companies have grown and even thrived despite the recession. A closer look beyond the numbers shows how they achieved their success.
PITNEY BOWES DELIVERS Incorporated in 1920 as the Pitney Bowes Postage Meter Company, today Pitney Bowes (PBI) is the largest provider of mail processing equipment and integrated mail solutions in the world. It saw big changes in the last couple of years, helping it to climb 42 slots from its spot at 76 in 2007 to 34 in 2008.
The company conducts activities in seven business segments within its Mailstream Solutions (U.S. Mailing, International Mailing, Production Mail, Software) and Mailstream Services (Management Services, Mail Services, Marketing Services) groups. It is based in Stamford, Conn.
Even though its employee growth was negative due to a restructuring program begun in 2007, sales were up slightly. The restructuring program worked, as the company showed improvements of two points or more in pretax income growth and pretax income margin, as well as year-over-year change in patents issued and closing stock price to high stock price ratio. Its stockholder’s equity was in a negative balance position at the end of 2008, though, which is never a good thing.
U.S Mailing is PBI’s largest single revenue category at 35% of total, while the combination of International Mailing and Management Services makes up another 37% of total revenues. In essence, half of the company’s revenues comes from the sale and operation of postage meters (Fig. 5). PBI has over 2 million customers globally. This segment is heavily regulated by national governments, which creates high barriers to entry and protects PBI’s virtual monopoly.
PBI controls about 80% of the U.S. postage meter market and about 65% of the international market. Competition consists of French company Neopost and Francotyp Postalia of Germany. While the lack of competition is a positive and PBI’s revenues in this segment are 4.5 times greater than its nearest competitor, the problem is that there is no growth in this market. With the advent of Internet-based advertising, it is actually slightly declining.
PBI was helped by the 2007 change in domestic postal regulations to “shape-based postage pricing,” which accounts for the shape of mail, as well as its weight. Shapes that can be processed easier will cost less. As of 2008, international mail is now subject to the same “shape-based” rules. Products like PBI’s “Shape Based Sizing Template” help mailers determine the most cost effective “shapes.” In addition, demand for machines that will process the most effective “shapes” will increase.
To grow, PBI has had to look outside its traditional postal meter market into areas such as document services, including letter production and design software, postal facilities management, and outsourced marketing. From 2000 to 2007, PBI has spent around $2.5 billion on 83 acquisitions in these areas, including companies like MapInfo and Digital Cement. In April 2008, PBI acquired Zipsort, a mailing presorting and metering company.
The acquisitions have focused on location intelligence, customer relationship management (CRM), Web-based tools for customized promotional mail and marketing collateral, print management services, electronic discovery services and litigation support, imaging equipment, high-end mail sorting, facility management of print/mail/copy centers, and other areas.
PBI also is partnering with E4x, the New York City global e-commerce company. Using the E4x platform, PBI can simplify everything from cross-border transactions to the shipment of merchandise outside the U.S., giving domestic and international shoppers a common online experience, instantly calculating endto- end costs in the buyer’s local currency.
Then, with PBI’s new international package solution from its Mail Services business, customers can expedite delivery, getting purchases through customs and into the hands of buyers that much faster. This strategic partnership, in combination with leveraging PBI’s core business, makes a lot of sense as an example of a future growth opportunity.
The risk lies in the fact that while these acquired companies present growth opportunities, it’s a relatively new phenomenon for PBI. Not only do these companies have to be integrated smoothly into PBI, there is no government regulation, and low barriers to entry create competition in its market segments, something PBI is not used to facing.
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