Pitney Bowes has a measured approach to managing mail. The world's largest producer of postage meters, the company also makes other mailing equipment and provides shipping and weighing systems. Pitney Bowes offers online postage services, financing for office equipment purchases, and facilities management services. It also develops software to create mailers and manage shipping, transportation, and logistics for government agencies and corporations. The company provides document management services through Pitney Bowes Management Services. Pitney Bowes gets about 70% of its sales in the US, and all global revenues are split about evenly between small and medium-sized businesses (SMB) and large enterprises.
Lingering worldwide economic concerns drove revenue down for another year in 2011, with reduced SMB sales (the company's global mailing operations) and deferred large deals from enterprise clients. On the SMB side, North American (US and Canada) revenue dropped 7%, while global SMB climbed 5%. Pitney Bowes' enterprise customer group saw only one product segment improve for the year: software, which was up nearly 10% among enterprise clients. That boost came from a mix of acquisitions (which included Portrait Software plc), foreign currency effects, and higher licensing revenue.
Software, in fact, was the only product category to see gains across the company's customer groups. Software still remains, however, less than 10% of total revenues. The largest product categories, business services and equipment sales, were down 3% and 4% for 2011, respectively. Equipment sales remained on a decline due to economy-influenced delays in capital investments from customers, while business services fell victim to the loss of sizable contracts.
The company initiated a plan in late 2009 to reduce costs, from which it expects to see annualized savings of more than $300 million, partly through a workforce reduction of up to 10%. The restructuring also will include streamlining corporate processes through implementation of enterprise-wide systems and common platforms, and through an increase in shared services across business units, including more outsourcing. Pitney Bowes cited improved productivity as the main driver for the 25% increase in earnings before interest and taxes in its international SMB segment for 2011.
Pitney Bowes expects that its product mix will shift, and that a greater percentage of revenue will come from sales to the enterprise market. It is emphasizing more management products and services that help large companies handle both physical and digital communications.
The company's growth strategy has included acquisitions and strategic partnerships. In 2010 Pitney Bowes added Portrait Software, a UK provider of customer relationship management software, for about £44 million (around $65 million). Portrait's software lets companies design more effective customer service and marketing campaigns using customer behavior data. Its customers have included Lloyds, Telenor, and Nationwide Building Society. In 2012 it teamed up with 3D design and engineering software provider Autodesk to further drive opportunities in software for enterprise customers. The two companies will work on integrating applications and developing new ones to address areas such as modeling, construction, and asset maintenance management for infrastructure clients and architecture, engineering, and construction businesses.
In 2011 Pitney Bowes pulled in nearly 20 digital mail delivery providers that will offer its cloud-based delivery service, Volly, launched that year. Also in 2011 Pitney Bowes Management Services became the preferred outsourcing partner for EMC Corporation's Captiva capture software, which helps businesses transition physical documents to digital.
Financial services company State Street Corporation owns nearly 13% of Pitney Bowes. – less