Though Idearc has not made any announcement regarding bankruptcy, in the last year and half Idearc’s (publisher of the Verizon yp and superpages.com) stock has dropped from $35 to around 10 cents a share. The company has 146 million outstanding shares of stock, which means you could pick up a company that does about $3 billion in revenue with fat margins for just over $14 million. Usage of the yellow pages is still relatively strong at over 12 billion look-ups last year.
So, why would a company that is so cash rich be facing bankruptcy? Well, when Verizon spun it off in 2006 it sent it away with 9 billion dollars in debt. (Which sounds a little shady to me). So, it would seem the logical thing to do now would be to file bankruptcy, pay off the debtors at a few cents on the dollar and reorganize.
But they may cause a whole other problem. In this headline driven world, everyone is going to hear only that the yellow pages is bankrupt. And everyone will think they ran out of money because no one is using it anymore. Then people will think they now NEED to use the internet to get information when making a local purchase decision. Then the yellow pages will be bankrupt for real.
Idearc better think long and hard about the public relations end of any bankruptcy.
If Idearc does file bankruptcy it could void their intellectual property agreement with Verizon.
Under the Intellectual Property Agreement, Verizon Services also agreed not to
grant any licenses to use specified intellectual property to any person who
competes directly with Verizon or Idearc Media. The Intellectual Property
Agreement is terminable by Verizon Services only in the event of Idearc Media’s
bankruptcy, or in an event of default by Idearc Media.
I would not be surprised if they are in negotiations with Verizon right now over this and this may be what’s been keeping them from filing thus far.