A little over three years ago, Yell Group - comprising of Yellow Pages directories, online advertising and specialist phone listings - enjoyed its highest ever share price of 639.50 pence but since the 16th February 2007 it has been downhill and today it languishes at just 29.60 pence: falling nearly 9% yesterday.
On May 18th 2010, Yell said that it made a profit of £46.8 million, compared to loss of £1.14 billion last year but what was telling, and obviously spooked the markets, was the shock departure of both its CEO, John Condron, and chief financial officer John Davis.
Yell is famous for its Yellow Pages directory but has faced a unique set of negative challenges in recent years: the rise of the internet has seen advertisers leave in their droves due to the greater flexibility that online advertising offers: deep recession has also seen big cutbacks in advertising spend and there is the environmental angle as so many trees have to be cut down to create their yellow books and many just going to landfill without being opened.
Yell's problem is that its online revenues are not growing fast enough to stem the flow of its losses from selling printed advertising in Yellow Pages - in the UK, online represents 29% of Yell's business.
According to Yell's results, Yell.com lost 8.3% of its advertisers and 9.3% of its website users but actually increased revenues by upping its charges by 8.7%.
In stark contrast, printed revenues from Yellow Pages fell by 18.8% as the group lost 14.1% of its advertisers.
Overall, in 2009/10, Yell group's revenues were down by 11.5% and although they did make a profit, they did so by upping their charges by a considerable amount and with so much competition from social media and specialist websites, I cannot possible see how Yell can do this consistently and grow their revenues?
In his parting speech, which accompanied the results, CEO, John Condron, was cautious about the future saying, “Economic recovery, and therefore the recovery of our customers’ confidence, has yet to become fully established. However, we continue to experience noticeable improvement in the rate of decline."
It is my view that Yell will have to continue buying up online business - it's just bought Trustedplaces Ltd - to maintain or increase its presence whilst deploying a rather large parachute as it navigates for a soft landing from the continued decline from printed advertising.
See Yell Group share graph for the last ten years.