Pitney Bowes, the postal management company, is a hated name at my office, and probably yours too, if like us you are stuck with a machine and a contract you no longer need. And trust me, you are stuck if you have signed a contract with this fat old company that has a mighty big problem. Their business, their wonderful cash cow of a business, is rapidly going down the drain.
They share the Eastman Kodak problem; the U.S. Postal Service problem. What do you do if the market for your core business is shrinking? We’ve seen this story in machine tools. Remember National Acme, Kearney and Trecker, Warner & Swasey and the not-to-be-forgotten, Rockford Shaper?
What we learned in the last few weeks while complaining about our contract with Pitney Bowes, is that we are bound for 3.5 years by a noose of a contract we signed without much thought in 2010. Our lawyer, Russell Ethridge, read the fine print of the legal document and lamented our plight. He said he’s never seen a more ironclad contract.
So this is what companies like Pitney Bowes do. They hire astute lawyers to draft airtight contracts and then they stonewall anybody who wants to wiggle out, because – well, how many stamps does one need today? We found out the same thing when we wanted to alter our Aramark contract for uniforms. They laughed at us. Made us feel like the suckers we were.
I ask myself, and you. Is it great policy for a Pitney Bowes to irritate and alienate its clientele? The clear signal Pitney Bowes is sending is that they no longer care about goodwill.
From an investment standpoint they have chosen to try to prop up their stock by paying a huge dividend – almost 8%. Some of the telephone landline firms have taken the same approach. They are saying that their best idea is to reward the people who are gutsy or dumb enough to hold the stock of a fading company. People who buy Pitney Bowes stock are hoping to get out before they run out of money or start to cut the dividend.
Some big firms can bring in leadership to deal with a change in core business. Corning Inc. is one that comes to mind. Eastman Kodak spun off its chemical business that has done well to focus on the photography and film business that has been a disaster. It appears that Pitney Bowes is going to ride stamps into the grave. And they won’t be nice about it.
Question: Is Pitney Bowes the next Warner & Swasey? What would you do if you ran Pitney Bowes?
Videos clips from the Seinfeld episode in which Kramer wants to cancel his mail