Yell, the UK-based Yellow Pages provider has suffered two precipitous falls in its share price over the last few days, falling 15% yesterday, and taking a whopping 26% dive the day before (the biggest drop since its shares first went public in 2003). It lost more than a quarter of its value in a single day…
But why can’t executives at the company face up to reality: their business is no longer the same as it was 10 years ago, times are changing. CFO John Davis said the company is experiencing a tough economic environment – no shit Sherlock!!! But more revealing is that he chooses to blame the falls on factors that are generally outside of their control, i.e. the ‘economic environment’. Their suggestion is that because of the tough climate their advertisers are tightening their belts and that causes them to spend less on advertising, but that doesn’t match up with the typical directory sales person’s take, which is when times are tough you should be spending more on advertising – come on guys, you can’t have it both ways.
No, I’ll tell you what it is, and the evidence is clear for everyone to see: FEWER consumers are using the Yellow Pages and directories like it, and businesses are spending LESS because they have more places to spend their money online and offline. Now, since Yell gets only 11% of its revenues from online, I’d say they have SERIOUSLY underestimated the significance of online and new consumer AND advertiser behaviours.
It reminds me of a story told to me in my childhood, the story of King Canute who tried to defy the incoming tide and drowned as a result. Nope, fat-cat highly paid corporate executives versus agile smart startups rarely makes for a fair fight. QED.