the yellow pages fiasco
Yellow Pages was a subsidiary of Bell Canada.It ,in fact, was the arm that handled the advertising in their phone books.In the 80's and 90's this was the best way of advertising as in "let your fingers do the walking".Yellow Pages had a considerable amount of advertising revenue.They started to use this revenue to buy other companies.Their equity started to increase.One of their last acquisitions was called Auto Trader which generated a lot of revenue and profit.However they made a lot of acquisitions and acquired a lot of debt.
The criticism against Yellow Pages is that it had too much debt and too much print revenue.They needed less debt and less print revenue.So they changed their name to Yellow Media and sold about 75% of Auto Trader.This reduced their debt and their print revenue.And Auto Trader started to do more internet advertising.Yellow was changing colours.Many stockbrokers got on TV (especially B.N.N.) and criticisized the deal.In particular a broker called Ross Healy.They said Yellow had still too much debt and not enough earnings.TDCanadatrust Research was showing Yellow as making about $1.00 in earnings per share through this whole fiasco.This should put the stock price at about $5.00 to $6.00 per share.But the brokers.especially Ross Healey were calling for a price target of $.25 and lo and behold it went to $.50 and then finally to $.05 per share.
Yellow stayed at about $.05 to $.07 per share for several months.Then Yellow Media announced that the bond holders were going to reorganize the common shares.This drove the stock up to $.10 and then back to $.05 again.Then the bond holders dissolved a huge amount of common shares and converted the old price to the new price.The new price was about $7.00 per share.After all the earnings were still about $1.10 per share.
I had 2500 shares of Yellow Media before conversion and after I had about 6 shares at $7.00 per share and a few warrantsI am sure I am not the only one that saw Yellow turn green!
The criticism against Yellow Pages is that it had too much debt and too much print revenue.They needed less debt and less print revenue.So they changed their name to Yellow Media and sold about 75% of Auto Trader.This reduced their debt and their print revenue.And Auto Trader started to do more internet advertising.Yellow was changing colours.Many stockbrokers got on TV (especially B.N.N.) and criticisized the deal.In particular a broker called Ross Healy.They said Yellow had still too much debt and not enough earnings.TDCanadatrust Research was showing Yellow as making about $1.00 in earnings per share through this whole fiasco.This should put the stock price at about $5.00 to $6.00 per share.But the brokers.especially Ross Healey were calling for a price target of $.25 and lo and behold it went to $.50 and then finally to $.05 per share.
Yellow stayed at about $.05 to $.07 per share for several months.Then Yellow Media announced that the bond holders were going to reorganize the common shares.This drove the stock up to $.10 and then back to $.05 again.Then the bond holders dissolved a huge amount of common shares and converted the old price to the new price.The new price was about $7.00 per share.After all the earnings were still about $1.10 per share.
I had 2500 shares of Yellow Media before conversion and after I had about 6 shares at $7.00 per share and a few warrantsI am sure I am not the only one that saw Yellow turn green!
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