Yellow Media to take C$2.9 billion charge, shares dive
By Bhaswati Mukhopadhyay and Pav Jordan
(Reuters) - Yellow Media Inc YLO.TO, the Canadian telephone directory publisher struggling to survive in the digital age, said on Wednesday it would take a C$2.9 billion ($2.8 billion) charge in the third quarter, sparking a 50 percent fall in its stock price.
Yellow Media also said it will stop paying dividends after its October payment as it struggles to switch from print to a digital platform, while trying to manage its debt.
Shares in the company, which gets about three-quarters of its revenue from selling advertisements in its Yellow Pages and related business directories, plummeted 49 percent to 29 Canadian cents in late-morning trade in Toronto on Wednesday.
The stock was down more than 50 percent at the open and is worth about 50 times less than it was in 2007, when it traded at around C$14.
The company has faced declining demand for print ads in its Yellow Pages and related directories and has had difficulties selling online ad space and coaxing advertisers to buy prime placements on its mobile platform.
At the same time, it faces growing competition online from such giants as Google Inc (GOOG.O: Quote).
"It's definitely, going forward, a company that will face a higher degree of earnings volatility," said Madhav Hari of Standard & Poor's Ratings Services.
In August, Standard & Poor's cut its credit rating on Yellow Media, which is grappling with C$2.16 billion in debt, to 'BB+' from 'BBB-'. Continued...