Directory publisher comes up short
REMEMBER the 1997 Yellow Pages Christmas advert? The one where a little boy steps on the directory to kiss a girl under the mistletoe because he is too short to reach her otherwise. These days, the Yellow Pages is tiny, a shadow of its former self, barely bigger than a paperback novel. The boy in the advert would need six or seven copies to get anywhere near his belle.
Of course, these days the boy in the advert wouldn’t dream of using a printed directory to find his local plumber or locksmith. The boy – in fact he is now a twenty-something year old man – would search online instead, and he would probably use Google rather than yell.com, the online address of the Yellow Pages.
This is the source of the company’s woes. Printed ad sales, which still account for around 70 per cent of revenues, are evaporating too quickly. Tough competition online means it is losing ground here too. Visitors to its digital directory were down 17.5 per cent in the three months to the end of December while revenues in this division fell by 15.7 per cent to £77.6m.
Last year, Yell pinned its faltering hopes on a new digital strategy, which sees it build websites for small businesses. Revenues in this area grew by 111.8 per cent to £35.4m in the quarter, but they still account for less than a tenth of overall sales. It is too little, too late.
Shares in the company shed 19 per cent yesterday, valuing it at £115m – a tiny sum compared to its massive £2.6bn debt pile.
That’s why we think the only thing you should do with Yell’s shares is short them. Which is appropriate enough if you remember that 1997 Christmas advert.