Despite recent reassurances from Yellow Media Inc. that its business is in okay shape, the shares were tunnelling new lows on Tuesday. In afternoon trading, they were down more than 6 per cent, to $3.35, bringing the total decline this year to 46 per cent. Ouch.
While the company's iconic yellow pages directories might not be as important to consumers as they once were - say, before the days of Google - Yellow Media has been striving to update its business model. To that end, it announced a strategic initiative on Tuesday with foursquare, the social networking site that allows people to locate their friends using mobile phones.
Investors, though, don't seem to care. Last month, there had been concerns that Yellow Media's $745-million sale of its Trader Corp. unit had hit some snags, potentially hurting the company's attempt to bring down its $2.1-billion debt load and stay on side with debt rating agencies.
The sharp slide in Yellow Media's share price even cajoled the company into making an official statement in response to the concerns: "While it is Yellow Media Inc.'s policy not to comment on market rumours or speculation, the company is today confirming that the transaction is proceeding as planned and in accordance with the terms of the definitive agreement...."
The company also reaffirmed its annual cash dividend of 65 cents a share. With the dividend yield now above 18, investors clearly have little confidence that the dividend will continue to be paid.