Why Couldn't Amazon Buy the Postal Service?
The service starts this holiday season in New York and California. It's due to expand into other markets next year.
But wait, you say. Isn't the Postal Service killing Saturday delivery? They planned to do that starting last August . Congress stopped them. Yet now they're adding Sunday operations, for Amazon packages. Something doesn't add up.
What mostly doesn't add up is the U.S. Congress, which requires that the Postal Service pre-pay retiree health care costs. This is where most of its losses come from.
The Congress also refuses to let the Postal Service close unprofitable branches, and it spends a lot of time re-naming post offices for folks. They're also accused of selling out the nicer branches, through a company controlled by a U.S. Senator's spouse .
They're micro-managing, in other words.
But what if the Postal Service were private? They do file a 10-Q report each quarter, just like a real business. This is used, in part, to justify rate increases, which again can't be done unilaterally.
The National Academy of Public Administration suggested earlier this year that the postal service should be "partly privatized," keeping its delivery service but outsourcing the rest. That study was partly financed by Pitney-Bowes
But what if Amazon.Com were to just, you know, buy the U.S. Postal Service?
At its current price Amazon.Com is worth $162 billion. United Parcel Service
Of course, UPS is profitable. That price also assumes a price-to-earnings ratio of 64, which means investors think profits are heading higher, or the stock is heading lower.
Its latest 10-K report the postal service reported revenue of $65 billion . Its mail volumes have been declining, from more than 210 million pieces in 2007 to last year's 160 million, and revenue has also been falling. From more than $75 billion to last year's figure.
The Postal Service may not be worth 80% of revenue, or $52 billion, but maybe with its valuable real estate such a deal could be done, as the American Enterprise Institute proposed back in 2011.
Wouldn't Amazon be a logical buyer? They have the equity to do the deal. The government might like holding almost one-third of Amazon.com, at least for a time.
Yes, I know. All this is subject to approval by Congress. Something has to be done regarding the Postal Service's pension benefits, and that would be complicated. There would be enormous political opposition. It's probably not happening.
But what if, instead of competing with a federal agency, UPS and Federal Express