With the Federal Reserve's intervention in the corporate commercial paper market, and the guarantees on short term bank debt elsewhere, the 3 month LIBOR rate is starting to fall at a faster pace, now standing at 2.86%. This is a favorable development given that many rates are tied to LIBOR, including many adjustable rate mortgages. It also means that I am back to relying on the guaranteed rate in the floating rate preferred stocks previously discussed such as METPRA and AEB.
Monday, November 3, 2008
Pitney Bowes (PBI): No More Adds this Year
After reviewing the earnings report from Pitney Bowes, I decided to refrain from buying any additional shares for the remainder of this year. The report was worse than I anticipated, with the company earning .67 excluding charges versus the consensus estimate of .70. PBI claimed that the rapid rise in the dollar toward the end of the quarter clipped three cents off its profits.Yahoo! Finance The company also cut its 2008 outlook some, expecting earnings of $2.75 to $2.82 down from its prior guidance of $2.8 to $2.9. Yahoo! FinanceThe later issue is of no consequence to me. I would also expect, at a minimum, an uninspiring first and second quarter for 2009. The questions now, for all of these purchases, are (1) whether there are better opportunities elsewhere for my spare capital and (2) whether the decline in the stock price over the past year to today's price more than adequately reflects the dimming prospects for 2009. The stock did trade down in after hours trading by $2.11 per share but the volume was only 11,000 shares. For now, the earnings report was not bad enough to sell the shares purchased today, nor good enough to develop a plan to add additional shares to my starter position after further weakness. I will read a transcript of the earnings call and make a note of any important future developments that may impact my decision to buy more shares or to sell the few bought today. For now, I will just wait and see what happens until the release of the next earnings report for the December quarter and move on to other opportunities.