Shares in Yellow Media Inc. (TSX:YLO) tumbled more than 45 per cent in to 31 cents on Wednesday on the Toronto Stock Exchange after the company’s review of its operations concluded that its assets are worth less than previously thought.
Yellow Media said on Wednesday it would take a C$2.9 billion ($2.8 billion) charge in the third quarter, sparking a 50 percent fall in its stock price. Yellow Media also said it will stop paying dividends after its October payment as it struggles to switch from print to a digital platform, while trying to manage its debt.
Is this company done for?
Yellow Media is the largest telephone directory publisher in Canada. Online properties comprise the YellowPages.ca and Canada411.ca online telephone directories, and the CanadaPlus.ca group of major Canadian city websites.
Print directories include 340 telephone directories published annually for Bell Canada, Telus, Bell Aliant, MTS Allstream and other telephone companies.
One of the reasons I don’t think this company will recover is that 75% of revenue is still coming from physical telephone directories.
A removal of all dividends paid to shareholders should be a sign that this company will not come back. Additionally, their CFO resigned on September 6 as another big blow (http://www.ypg.com/en/newsroom/529-yellow-media-incs-chief-financial-officer-to-step-down).
When was the last time you used a phone book?
No one uses them anymore, this is a dying business, and YPG should divest from this business into other more profitable online directories.