Pitney Bowes (NYSE:PBI) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
Shannon Cross – Cross Research: I guess, my first question is, can you just give us a little more color on what’s going on within Software, because, obviously, the pressure there was substantial? Marc, I’d like to know your thoughts, especially given your background in terms of how you expect that division to sort of improve and how much of this obviously is economic versus maybe some holes in the portfolio? Just any color you can give there would be helpful and then I have another one.
Marc B. Lautenbach – President and CEO: Thanks, Shannon, and we’ll give more color on this on Friday, but let me start with a little bit of context. First of all, you know our business well and you understand that some of our most important digital opportunities are outside of the Software business currently, whether it be our initiative around Volly or should be an initiative around eBay. So I think that’s important context, because I do think that the digital opportunities are important growth opportunities for us going forward. My analysis of the Software business is as follows. First of all, I do believe we’ve got good technologies. I don’t think we’ve made the level of investments that we need to in all of those products, but in general, I would characterize our products as good if not leading-edge, but there is more opportunities we can do to differentiate ourselves there. As I digest the first quarter results, my bottom line on software was around sales execution and I’m confident that the new leader will make a difference. Certainly, it’s going to take him a while to sort through the things that need to get done, but I think he has very relevant experience in terms of putting together disparate businesses into a level of coherency that will allow us to move forward and, very importantly, has very strong sales credentials.
Shannon Cross – Cross Research: Could you talk a bit about the – in SMB, obviously, you are expecting – how I say this, diminishment of the pressure from the recurring revenue declines as we go through the year. But can you talk about what you are seeing on from an end user demand standpoint? I am interested in the fact that you mentioned that the pressure on EBIT came somewhat from higher equipment sales versus lease push-outs. So what are your customers telling you in terms of their interest and how much are some of the online services that you’re now providing for SMB sort of helping to make the discussion easier…
Michael Monahan – EVP and CFO: Shannon, it’s Mike. Couple of things to your questions. One, on the lease extension versus new equipment sales, that’s been a very deliberate program on our part to place more new equipment, and as you know, that has somewhat less of a positive margin impact, still very good margin, but less than a lease extension because there is a new piece of equipment involved, but we believe that that presents us more opportunity to build recurring revenue streams over time, particularly when you get into products line Connect+ that has color ink opportunities and greater ink usage opportunities as well as other applications that we can deliver to the customers. So we believe and have been shifting to a greater focus on new equipment placements. We saw the positive impact of that particularly in the international segment as well. In terms of other digital products, we are seeing a base of customers grow at the low-end where we’ve integrated our low-end meter with digital postage applications. So that will build a recurring stream over time. It’s part of the reason why we anticipate continued improvement in the recurring revenue streams as we go forward; part of it is really the rollover of the lease space, as well as the addition of some of these other opportunities to grow recurring revenue streams.
Shannon Cross – Cross Research: Then just my last question, because I’d be remiss if I don’t ask, in the release you don’t mention share repurchase. Is that something that’s still on the table, and I don’t want to steal the thunder from Friday, but I’m just curious is that, so how you’re thinking about a restart of that program?
Marc B. Lautenbach – President and CEO: Shannon it is on the table. It is one of the tools that we have at our disposal to drive shareholder value. So we will use it opportunistically going forward.
Revenue Growth Guidance
Ananda Baruah – Brean Murray, Carret & Co.: I guess Marc and Mike given the guidance, due to affirmation of the guidance and just based on the comments in the press release and on the calls, it sounds like there might have been a tad bit slower start to the year than you had have expected and given the second half weighted nature of the guidance. Could you just give us a sense of how you see the drivers unfolding; that can get you into the middle of the EPS range and into the revenue growth guidance range for the year?
Michael Monahan – EVP and CFO: Yeah, good question. In terms of the revenue for the first quarter, I would say, if there was something that was outside of our expectations, it was the software performance and Marc talked to what we would do to address that. As we look forward, in terms of revenue drivers, we have handful of growth initiatives that we have been investing in, e-commerce is one and we’re beginning to see some benefits from the early stages of that. We have the print outsourcing and document management solutions in PBMS that we have been investing in. We noted some initial revenue from Volly licensing revenue related to Australia. The fact that we expect recurring revenue streams to continue to moderate in the mailing business will be a contributor as well. As we noted, Production Mail continues to have a strong backlog and that should contribute to revenue as we go out in the year. So those are the things we’re looking towards as we look at our overall guidance.
Ananda Baruah – Brean Murray, Carret & Co.: Mike, how much do the incremental cost savings opportunities play into the guidance at this point?
Michael Monahan – EVP and CFO: We talked about at the beginning of the year, or actually at our fourth quarter earnings announcement, some initial actions we were taking. I think you’re beginning to see the benefits of those in terms of our first quarter performance, where SG&A was down about 7% year-over-year. we’ll continue to take a disciplined approach to implementing those types of actions and we’re continue to look at that and we’ll talk more about that on Friday….
Ananda Baruah – Brean Murray, Carret & Co.: I guess just based on – it sounds like the core business, I mean sort of the – you are seeing the same sort of trends in the core business, let’s call it, sort of the recurring revenue streams beginning to continue to improve, is it really just a matter of getting some of these new initiatives to kind of hit stride and catch – do you expect some of that, I guess as sort of like an ongoing confluence of things? But can we expect revenue growth to turn positive potentially in the September quarter? I mean I feel like that that probably needs to happen to really kind of get you within earshot of the sort of the revenue growth guidance range?
Michael Monahan – EVP and CFO: Obviously, we don’t give quarterly guidance, but for the full year at the flat to plus 3%, it would suggest that we’re going to have to have some positive quarters out in the year.
Ananda Baruah – Brean Murray, Carret & Co.: Just last one for me, guys. The cash flow, can you just talk about the levers on the cash flow for the quarter? I guess it’s a little bit light relative to my model. You obviously don’t give quarterly guidance there. Since the full cash flow statement isn’t out yet, if you can just sort of talk about the moving parts there, I think that would be useful, thanks.
Michael Monahan – EVP and CFO: Sure. I think just to boil it down quite simply, if I compare it to prior year, virtually all of the difference is related to the fact that we received about $70 million of tax refunds last year related to some of the tax settlement items that we had. That’s the bulk of the difference on a year-over-year basis. Obviously, earnings were a little bit lower, but our working capital performance was better, so those sort of offset one another. That’s why we’re comfortable reaffirming our guidance for the full year.
Ananda Baruah – Brean Murray, Carret & Co.: Got it. So other than that you’re sort of where we expect it to be.
Michael Monahan – EVP and CFO: That’s correct.