[tendim]

Did a search but didn't find much useful.

What are folks thoughts on Yellow Media Inc (YLO)?

Their share price has dropped considerably, but they are still paying a consistent dividend (although that has been lessened due to the restructuring from a trust to a corporation). I'm treating this as fixed income, so as long as they continue to pay dividends, I'm not too concerned about their share price.

Thoughts? Any holders? Theoretically now is a great time to buy and top up the position.

Cheers.

 

[jamesbe]

Sinking ship.

They just sold Trader corp for less than half of what they paid for it 2 years ago.

They haven't figured out how to make money in an age where you aren't the only game in town (phone books).

 

[Freedom45]

I'm with jamesbe. They're leaders in a dying/dead industry. When was the last time you looked in the Yellow Pages, or their website?

There are other companies that pay healthy dividends that I would pick long before YLO. My $0.02.

 

[m3s]

I haven't unwrapped a Yellow Pages book in years and I sigh every time they deliver palates of them to work that nobody will ever open in the age of internetz

I used to use their Yellow Pages iPhone app, but Google Places has it beaten handily now

They bought the local classified "LesPacs" in Québec, and it seriously sucks and costs way too much compared to the superior and free Kijiji. They try to call you when you place an ad to push you to pay more for no good reason as well. I think I paid $20 to list a motorbike and found a quick buyer on Kijiji anyways

Redflagdeals is an alright site... so you're investing in a free website imo

Another Dinosaur about to be extinct IMO

 

[daddybigbucks]

look at the 5 year chart and it becomes painfully clear.

I wouldn't buy YLO even with mode3sour's money.

 

[HaroldCrump]

Agreed, it's got one leg in the grave.
I hold some of their bonds, maturing in 2015.
As long as they hold off bankruptcy until then, I'm good.
I wouldn't touch their common shares with a 10-ft. pole.
The recent sale of Auto Trader is just another nail in the coffin.

They have gone from a business where they had a near monopoly to a vastly competitive, low margin and fickle minded industry, where they have no skills and no experience.
There's of course a small chance that it could all work out, you never know...but it'll take a long time and it'll be a painful process.

 

[m3s]

I wouldn't buy YLO even with mode3sour's money.

There's of course a small chance that it could all work out, you never know...but it'll take a long time and it'll be a painful process.

After seeing what they've done with autrotrader and lespac I can't imagine how. People seem so reluctant to switch from those pay sites and they still screw it up with slow old fashioned quality webdesign among other nuances to practically boot the last ones out the door, and then have the nerve to spam you for more money. Could they at least beat kijiji's service for a fee?

 

[HaroldCrump]

After seeing what they've done with autrotrader and lespac I can't imagine how. People seem so reluctant to switch from those pay sites and they still screw it up with slow old fashioned quality webdesign among other nuances to practically boot the last ones out the door, and then have the nerve to spam you for more money. Could they at least beat kijiji's service for a fee?

I agree, mode, as I said I wouldn't touch it.
I think this will go the way of many other high yield stocks from the past...the dividends keep flowing in until one fine morning when everything falls apart.
The true players and institutions will time their exits and get out before the s*th hits the fan, wiping out the small investors that didn't see the writing on the wall.

 

[Argonaut]

For a high yield play, Just Energy (JE) would be a better choice. Not much growth, but good cash flow and no debt problems.

 

[webber22]

There is very high volume on some days with this stock, anyone have any ideas why?

 

[financialuproar]

Yeah, YLO is crap.

Lots of debt combined with very little in tangible assets. I took a look at the preferred shares a few years ago, but I was concerned about a cut in the dividend in the common shares and the damage that would do to the preferreds.

Even my Grandma uses the internet to find out stuff she used to use the yellow pages for. And she's about 2 million years old.

 

[Potato]

I still hold it, but I'm not nearly as bullish as I was a few years ago.

The positives include the huge swath of negativity you saw in every other response so far: that's real contrarian sentiment! People have been calling for the death of the yellow pages for years, but it's been a slow death. Top-line revenue has been flat, even through the recession, as their online and smartphone revenues offset the declines elsewhere. Bottom-line's been a bit of a different story, but still, a slow death that may already be priced in.

Unfortunately, the negative attitudes have a good basis: lots of debt (I kept hoping they'd use the cash generated to pay off the debt, but instead the seem to keep finding things to buy), and the future of the business doesn't look good. Though their online offerings are growing and making money, online is a far more fickle place than the staid print directory.

 

[tendim]

Thanks everyone for your comments.

I'm long a small position, but it provides a nice steady stream of income to my TFSA which I am happy to live with. When I did my original analysis on YLO.UN last year, it looked like a good buy. Back then the shares were also trading at over $6.00, so obviously much has changed.

I'd agree with Potato:

The positives include the huge swath of negativity you saw in every other response so far: that's real contrarian sentiment! People have been calling for the death of the yellow pages for years, but it's been a slow death.

While it may be true that the sale of Trader.com lost money relative to what they paid for it, from what I have read so far the price they received was in excess of the current fair market value. Aside from that, everyone seems to be assuming that Yellow Media Inc. is all about the Yellow Pages, but they have moved into other territories as well. A lot of the negative sentiment seems to be based on what their previous business model was -- in a paper world, and they are letting their thoughts cloud judgment on the actual fair value of the stock. I'll have to do a re-analysis of course, but so far from a cursory look things are mixed from a fundamentals perspective (YoY from 2009 to 2010):

• P/E has remained nicely below the magic Graham number of 15
• EPS, while it took a dive in 2008, has climbed YoY by 35% from 2009 to 2010
• Both quick and current ratios have dropped
• Debt to equity has stayed relatively consistent over the past 5 years (~.415 +/- 8%)

I guess we'll have to see where things lie on May 5 when they announce the F2011-Q1 results.

At the end of the day I am holding this as a cash flow, not a capital gains vehicle. So as long as they keep paying dividends, I'll be happy.

Cheers.
-10d

 

[m3s]

While it may be true that the sale of Trader.com lost money relative to what they paid for it, from what I have read so far the price they received was in excess of the current fair market value. Aside from that, everyone seems to be assuming that Yellow Media Inc. is all about the Yellow Pages, but they have moved into other territories as well. A lot of the negative sentiment seems to be based on what their previous business model was -- in a paper world, and they are letting their thoughts cloud judgment on the actual fair value of the stock. I'll have to do a re-analysis of course, but so far from a cursory look things are mixed from a fundamentals perspective (YoY from 2009 to 2010):

No, you are letting the high yield cloud your judgement! Many have explained they were a good paper company and have no clue what they're doing online. All they've done is pay a lot for a few websites, add a Facebook fan page Twitter account and mobile app. They know paper is done and are clawing for something, and seem to think social media is all they need. They don't know what they're doing online, they've done nothing innovate themselves, they haven't improved the websites at all.

Here's a list of their websites.

• YellowPages.ca
• Canada411.ca
• Canadaplus.ca
• AutoTrader.ca
• Autos.ca
• BuySell.com
• HomeTRADER.ca
• PriceCanada.com
• RedFlagDeals.com
• Restaurantica.com
• Mediative.ca Deal of the Day
• LesPAC.com

The last one, LesPac.com used to be a popular local classified ad site in Québec but many have noticed negative changes since YLO took over. The prices went up, the searches keep glitching out and making you start over, you have to pay to edit your ad and then they call you spamming you for more money. Locals are moving to other sites and LesPac is not as popular as before YLO. Autotrader.ca was popular and they're ruined it as well. This solidifies to me that they are a paper company and know nothing about the internet.

I mean, who actually wants to follow trader.ca and lespac on their FB and twitter? Lespac just posted a pic of their lunch room! The fan pages mostly only have a few thousand followers, besides RFDs which has a whopping 23k. The autotrader fan page has 2 posts and one of them is spam!

LesPac and Autotrader were already good sites, and if they ruined them how are they going to make those other sites popular? How can they afford to pay such high dividends off these sites, when they're paying for them instead of designing them and have no internet innovation skills?

 

[kcowan]

LesPac and Autotrader were already good sites, and if they ruined them how are they going to make those other sites popular? How can they afford to pay such high dividends off these sites, when they're paying for them instead of designing them and have no internet innovation skills?

This is the best analysis of what is wrong with YP that I have seen. Thank you.

 

[Sustainable PF]

Here's a list of their websites.

• AutoTrader.ca
  

They most definitely changed AutoTrader but IMO it may look more "slick" the functionality I loved from the old version is gone and replaced with extremely clunky code.

 

[m3s]

They most definitely changed AutoTrader but IMO it may look more "slick" the functionality I loved from the old version is gone and replaced with extremely clunky code.

Yes I'm not sure what they did to LesPAC but clunky code sounds about right. You can now share ads on your Facebook and see their lunchroom on their Facebook Fan page but when your actually try to search for a vehicle it freezes and shows the wrong vehicle etc. Frustrating to the point most people have discovered/recommending peers to use Kijiji

 

[webber22]

The short position on this stock has shot up to over 10 million shares in the last 2 weeks. The preferred shares have lost close to 10% during this period as well, not a good sign. The earnings come out on Thursday - maybe now's a good time to sell if you have any

 

[kcowan]

My convertibles are paying a mere 6.25% until Oct2017. Unless they turn this puppy around soon, I will have to sell them at a loss.

 

[HaroldCrump]

Question for those of you that hold long positions : what are the chances of the company going belly-up?
How secure are their cash flows?

Reason I ask is after the latest round of sell off earlier this week, their bonds are now trading below par.
Many of the notes are maturing in the 2014 - 2016 timeframe and are trading between 94c. to 98c. on the $.
The yields are in the 6% - 6.8% range for an approx. 4 year holding period.
I believe most of these are unsecured debts, so are slightly superior in the capital structure compared to the units, but will probably get wiped out if the company files bankruptcy.

The RBC analyst recently downgraded the target price (guess he was away on a 6 month fishing trip!) but claims the debt is safe.

Opinions?