As Yellow Media Inc. (YLMPF)’s CEO Marc P. Tellier battles to adapt the struggling Montreal yellow pages company to the Internet, his team had to write down their earnings by $2.9 billion. It’s the ending to a story that began as early as 2005.
Tellier was on a shopping rampage at the time. In May 2005 he bought the directory publisher Advertising Directory Solutions Holdings Inc. Around a year later he also acquired Trader Media Corp. and Classified Media (Canada) Holdings Inc., combining the two classified ad and web site operations to form the media company Trader Corp. (Trader). Then in October 2006 he did another deal with the directory publisher MTS Media. In a regulatory filing that year, Yellow Media crowed that as a result of its investments, it was now the number one directory publisher in Canada’s ten largest markets. Tellier also grew his company’s sales by 45.9% to $1.39 billion in 2006 compared to the prior year.
Meanwhile the company’s goodwill charges rose from $3.27 billion as of Dec. 31, 2004 to $6.39 billion as of Dec. 31, 2006, according to regulatory filings. Then Yellow Media kept more than $6 billion in goodwill on its balance sheet until Dec. 31, 2010.
Those deals never became what Tellier had apparently hoped. After selling Trader Corp. in July 2011 in an effort to cut down its debt, Yellow Media announced that it had overestimated its goodwill by $2.9 billion. And now on May 7 the company took another $2.9 billion goodwill impairment charge for the quarter ending March 31 this year, noting changes in sales trends that affected its long-term projections.
In part due to its large goodwill, Yellow Media’s financial statements reflect an aggressive AGR score of 17. That means the company has more accounting and governance risk than 83% of comparable companies. Yellow Media’s AGR has dropped in recent months since from an average score of 40 in June 2011.
Overall GMI rates the company a C on its corporate governance.
Region: North America
Industry: Cyclical Consumer Goods / Services
Sector: Publishing
Market Cap: CAD 46.8mm (Nano Cap)
ESG Rating: C
AGR: Aggressive (17)
Tellier was on a shopping rampage at the time. In May 2005 he bought the directory publisher Advertising Directory Solutions Holdings Inc. Around a year later he also acquired Trader Media Corp. and Classified Media (Canada) Holdings Inc., combining the two classified ad and web site operations to form the media company Trader Corp. (Trader). Then in October 2006 he did another deal with the directory publisher MTS Media. In a regulatory filing that year, Yellow Media crowed that as a result of its investments, it was now the number one directory publisher in Canada’s ten largest markets. Tellier also grew his company’s sales by 45.9% to $1.39 billion in 2006 compared to the prior year.
Meanwhile the company’s goodwill charges rose from $3.27 billion as of Dec. 31, 2004 to $6.39 billion as of Dec. 31, 2006, according to regulatory filings. Then Yellow Media kept more than $6 billion in goodwill on its balance sheet until Dec. 31, 2010.
Those deals never became what Tellier had apparently hoped. After selling Trader Corp. in July 2011 in an effort to cut down its debt, Yellow Media announced that it had overestimated its goodwill by $2.9 billion. And now on May 7 the company took another $2.9 billion goodwill impairment charge for the quarter ending March 31 this year, noting changes in sales trends that affected its long-term projections.
In part due to its large goodwill, Yellow Media’s financial statements reflect an aggressive AGR score of 17. That means the company has more accounting and governance risk than 83% of comparable companies. Yellow Media’s AGR has dropped in recent months since from an average score of 40 in June 2011.
Overall GMI rates the company a C on its corporate governance.
Region: North AmericaIndustry: Cyclical Consumer Goods / Services
Sector: Publishing
Market Cap: CAD 46.8mm (Nano Cap)
ESG Rating: C
AGR: Aggressive (17)
