Last Big Yellow Pages Transaction?

As speculated for sometime now, Verizon Communications filed the necessary papers to spin its Yellow Pages business — Verizon Information Services (to be named Directories Corp.) — out to the public market. The paperwork with the SEC was filed today. There's lots of information in the filing — much of which has generally been held close to the vest by the company. Here are some quick observations:

• Almost 200,000 "electronic" advertisers — 16 percent penetration of print advertisers (I revised this calculation after the original blog post — sorry)
• Revenue split is 90 percent print YP, 6 percent online and 4 percent White Pages
• Negative top-line growth 2001 2005 (-3 percent CAGR)
• Negative operating income growth 2001 2005 (-5 percent CAGR)

In the filing, the company acknowledges the usage transition from print to online directories. The company also explains the slowdown in online revenue growth being attributed to the transition from fixed to performance-based model.

Though not financial analysts, we'd expect a somewhat tepid reaction by the financial community. Directories Corp. will be loaded with $9.1 billion in debt and operates in some extremely competitive markets. That said, there are few legal businesses that drive the cash flow volumes on par with a Yellow Pages publisher. With AT&T unlikely to spin out its Yellow Pages business, this might well be the last big Yellow Pages property to go public for a very long time.

This Post Has One Comment

  1. Eric Sherman

    Neal,

    Can you explain the difference between Negative top line growth and operating income growth? Also, what is CAGR (i.e. -5% CAGR). Do you have any idea what this translates to in dollars and cents?

    Thank you,
    Eric Sherman

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