Pitney Bowes to cut 1,500 jobs
The Stamford-based mail and document-managing company expects results between a loss of 17 cents and a profit of 4 cents per share for the fourth quarter and $1.76 to $1.97 for the year. In October, Pitney Bowes forecast net income of 66 cents to 70 cents per share.
Excluding extraordinary items, the company said it still expects to earn 67 cents to 71 cents per share for the fourth quarter. Analysts expected a profit of 69 cents a share, according to a survey by Thomson Financial.
Shares rose 28 cents to $38.12 in midday trading Thursday.
"Today we have a larger, more diversified mailstream capable of delivering more than ever before, especially in combination with the Internet and emerging technologies," Murray Martin, president and chief executive, said in a statement. "We are well-positioned to take advantage of the opportunities for superior growth that exist in the mailstream because of the expansion and integration of our equipment, software and services."
Pitney Bowes also increased a share repurchase authorization to $500 million, to be completed within six months. The board of directors authorized a 2 cent increase in the quarterly dividend.
Costs associated with moving to all-digital and networked equipment will include non-cash charges associated with the write-off of inventory and lease agreements for older equipment that the company will stop selling, Pitney Bowes said. The remainder will be cash charges.
The company reaffirms anticipated fourth quarter revenue growth in the range of 6 percent to 9 percent, and revenue growth of 6 percent to 8 percent for 2007.
The company expects 2008 revenue growth between 6 percent and 9 percent and adjusted earnings per share from continuing operations between $2.80 and $2.90.
Analyst Shannon Cross of Cross Research said she had been expecting some action by Pitney Bowes following disappointing third-quarter earnings last month. The company's $127.6 million in profits was down about 16.5 percent, from $148.6 million in the same quarter last year. Per-share earnings sunk to 58 cents, from 67 cents in the third quarter of 2006.
"In light of the weakening of the economic situation and uncertainty on the postal side, I'm not surprised to hear this," Cross said.
Investors have seen the mailing industry as resistant to recessions, but that changed with the third-quarter earnings, she said.
However, the share repurchase shows a confidence in cash flow that should cheer investors, Cross said.
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