Is Idearc set for a bidding war?

December 7, 2009

Seems like the Paulson and Company (hedge fund) deal may not go through after all.

BMC offers 225 million on top of 200 million Paulson offer for Idearc Media


Idearc Exec resigns amongst allegations of fraud and cheating local advertisers

December 3, 2009

If an executive of your organization committed fraud and the other executives covered the actions up with an announcement of “retirement”, would you want your company to announce it publicly? PR Nightmare….. who will force Idearc to be accountable for the actions of executives? Is Verizon accountable for the companies debt burden and bankruptcy? Are they taking accountability? Should be not hold our executives to a higher standard? Decisions made at the executive level impact the lives of many families.

The President of Marketing and Transformation at Idearc Media is resigning due to allegations of fraud and using power as an Area President of the organization to get her husband’s paving business in the front of the existing Paving Contractors in the Greater Dallas Verizon Yellow Pages. Doesn’t surprise me folks. This is what I have been saying is wrong with the corporate ethics and culture within the organization. Apparently the latest news is that she authorized a new heading at book close II on the book designated “Pave Stone” which appeared before “Paving Contractors” (and is also a brand name and I am sure the co-op is another issue) thus allowing her husband’s paving company to be ahead of larger full page ads with a much lower cost 1/2 page ad. I recall this going around local management and the media consultant who was required to make the submission.

This is unfair to other advertisers. This is not ethical. Although I do find it disturbing that they are announcing her retirement as President of Marketing and Transformation. Just as fishy as the manner in which the company was spun off with a heavy unbearable debt burden from Verizon (along with Hawaiian Telecom and FairPoint Communications who are also bankrupt from debt burden) to become a stand-alone organization. Verizon used the funds to finance FIOS.

Other questionable potential questionable activities that should be asked of auditors and investors:

  • directives from executives to RVP’s regarding the reporting of sales net losses (nice bonuses!)
  • quarterly decrease and cancel reporting for directory publications (report the losses later with book close extentions)
  • pricing for Greater Dallas advertising under $850.00 per month credit limit (more potential credit concerns)
  • changing credit policy that increases risk while disclosing collection issues to investors (not disclosing the softened credit policies)
  • sales reps disclosing private company information to competitors (sales ethics violations)

Immediately upon taking office as the new CEO of Idearc Media, Scott Klein, hires his former sales manager at the building supply company to head one of the three sales regions, then the same Executive Vice President recently hires his neighbor to be the new Texas area Sales Manager…… And employees like myself who have contributed to the organization wonder why the ceiling is so low at the organization.

This entire thing just sounds like a bunch of cronyism that small business owners and investors might need to be aware of.

For more information stay tuned to http://www.yellowcrooks.com

If this is the level of Corporate Leadership you can expect from Idearc, why would you not want Union representation to protect you? My mother, TC (Stewart) Adams, was a Union Steward at GTE Telecom back in 1997. I always grew up listening to the inner workings of the union. Being a Conservative thinker, I’ve never believed union representation was in the best interest of employees. I remember when management told the Local Dallas CWA Union to leave the building at 4500 Fuller Drive in Irving Tx (the local Dallas area sales office for Verizon Directories.) After witnessing questionable activities and lack of corporate direction from the Executives in the organization, I am starting to think the union might further protect the employees from this mess? I also feel additional confidence in my future as a local search marketing specialist to local Dallas area business owners. Hope other employees make the transition.

BTW, how did Sandy Henjum manage to get on the Board of Directors for the Dallas Better Business Bureau? Are they aware of what she did? Are they going to investigate this action by a board member?

What are your thoughts?

Mike Stewart
-The Dallas Google Guru-
former Idearc Media Consultant from 2000-2009


The hedge fund Paulson also agreed not to attempt a takeover of Idearc following its exit from bankruptcy protection.

November 4, 2009

Paulson co header

Hedge fund Paulson & Co. is seeking to acquire up to 45% of Idearc Inc.’s common stock by offering creditors cash payment for the shares they are slated to receive under the directory publisher’s proposed reorganization plan.

In court papers filed Thursday with the U.S. Bankruptcy Court in Dallas, Paulson said its offer is based on the common stock having a value of $200 million. Idearc’s lenders are slated to take 95% of the reorganized company’s equity and unsecured creditors, including bondholders, would see 5% under a bankruptcy-exit plan Idearc sent out to creditors for a vote in September.

A holder of both secured and unsecured claims, Paulson is already in line to take 13% of the Idearc’s stock under the plan.

In court papers, Idearc said the deal with Paulson “will confer a benefit upon creditors not currently available under the plan.”

The deal, which requires court approval, would allow Paulson to name one member of Idearc’s board of directors if it succeeds in acquiring at least 20% of the shares.

To achieve that goal, Paulson can raise the price it is willing to pay for the stock and extend the time creditors have to consider accepting the plan.

The Dallas bankruptcy court will consider Idearc’s bankruptcy-exit plan at a Dec. 9 hearing. Paulson’s deal with the company requires that it emerge from Chapter 11 protection by Feb. 28, 2010.

Under the agreement, the percentage of shares the hedge fund can buy is capped at 45%, including the stock that it is already slated to receive under Idearc’s Chapter 11 plan. If creditors seek to exchange a greater percentage of shares, they would receive a combination of cash and stock to satisfy their debts.

The hedge fund also agreed not to attempt a takeover of Idearc following its exit from bankruptcy protection.

Idearc said the deal will stabilize its post-bankruptcy share price because creditors that would quickly sell their stock following emergence can instead select the cash option.

Idearc was spun out of Verizon Communications Inc. in 2006. The Dallas company’s restructuring plan eliminates $7 billion of the debt it took on as part of that transaction.

The company publishes Verizon’s print telephone directories and also hosts the online directory Superpages.com.

Paulson & Co. to own approx. 10% of Conseco


Idearc’s potential post Bankruptcy 45% buyout offer by John Paulson’s 20+ Billion Hedge Fund good News?

October 31, 2009

In my opinion, Idearc’s potential post Bankruptcy 45% buyout offer by John Paulson’s 20+ Billion Hedge Fund is really good News.

But I think they need to get the majority share of the company and go all in! Just 45% does not give them the stake they need to create real change in the organization. I don’t think what they are doing is close to being enough to save the Yellow Pages unless they start re-monopolizing. The industry has officially been broken apart since deregulation of the telephone companies and the birth of independent yellow pages publishers.

Recent announcement that current Idearc Employees likely are unaware of:

NEW YORK, Oct 30 (Reuters) – Hedge fund Paulson & Co is seeking to buy nearly half of bankrupt Yellow pages publisher Idearc Inc’s (IDARQ.PK) common shares when it emerges from bankruptcy by offering creditors cash for the shares they are to receive under its proposed reorganization plan.

Under a proposal Idearc filed with U.S Bankruptcy Court in Dallas, Paulson “will not beneficially own more than 45 percent” of the new Idearc’s common stock, Idearc said in a statement on Friday.

Paulson would have the right to name one director to Idearc’s board under the proposal.

A hearing on the deal, which is subject to court approval, is scheduled for Nov. 18. A separate hearing on Idearc’s plan of reorganization is set for Dec. 9.

Idearc Inc filed for bankruptcy in March, as revenue for its printed directories business dwindled amid a shift to online search and advertising.

Idearc was spun off from Verizon (VZ.N) in 2006.

pumpkincarving

The case is in Re: Idearc Inc, U.S. Bankruptcy Court for the Northern District of Texas, No. 09-31828. (Reporting by Phil Wahba)

WOW…..

If Paulson Hedge Fund is making a hard offer for 45% of the company’s stock it might potentially possibly maybe a great move for the employees of the company. Who knows? Something new related to how the company is going to make more money other than the cloud computing-outsourcing bandwagon the CEO is on to reduce expenses (meanwhile in my opinion simply making things more challenging to service the clients, and curb the churn of its mid-level clients.)  The yellow pages have always done well with clients that are “just gonna be represented anywhere and everywhere”.  They are typically your marketplace leaders and have the largest amount of resources and current clients. These folks are just now realizing that the company is best suited handling printed yellow page ads and postcards. Calling a client twice a year to discuss his internet presence by a new sales rep will never work towards the same level of success in search marketing and other forms of more creative media. It is great that the company is just about the last sales organization in America to annoy homeowners with unwanted direct mail postcards. It has been saturating Americans for years with wasteful phone book distribution.  The beauty of the internet: Folks actually ask for the information! WOW… subscription based…. what an amazing concept.  (DALLAS BUSINESS ADVERTISING TIP: Pay very close attention to the smart phone revolution — It may soon become another 2002-2004 when local search boomed the first time.)

Things for Paulson to consider when looking to replace a member of the companies Board of Directors: Idearc has had questions asked about tactics in the past on how it reports revenue, how it reports earnings due to the nature of being a publisher and collections on delinquent advertisers, and last but not least a class action lawsuit over raising credit limits for previously non-high risk advertisers with accusations of executive fraud related to the manner in which Executives of the company were reporting issues with receivables. Just imagine if they took the time to invest in Sales Fraud, accusations related to false contracts, unethical business practices of media consultants, and last but not least the manner in which it reports losses to influence incentive trips and bonuses for managers and executives.  Crony capitalism…… we Main Street folks love it!

I think the board needs to look at how this company has started and where it is now since becoming its own company in 2006.** (remember folks, I started as  a 19-year-old “Telephone Sales Call Center Rep” out of High School back when GTE became Verizon in 2000) ** Idearc was spun off in a very suspicious way Verizon’s part in order to unload some debt. Very disturbing since it had been investing the companies profits over the years to fund other projects (wireless) and then spun it off with the debt to fund another (FIOS/TV) project. Great move Verizon. You didn’t get caught like Bernie  the investment fella or Ken from Enron. Considering two other companies, Hawaiian Telecom & FairPoint Communication, also went bankrupt after Verizon separations; you can’t help but wonder if it was planned.

Paulson’ hedge fund ought to read:

Termination without Cause . If the Executive’s employment with Idearc is terminated before January 9, 2010 by Idearc without “cause” (as defined below), then the Executive will be immediately vested in a pro rata portion of the Shares that would have become vested on the next succeeding January 9, based upon the number of days elapsed from the preceding January 9 until the date the Executive’s employment with Idearc terminates, and the Executive will forfeit any remaining unvested Shares. For the purpose of determining whether the Executive’s employment is terminated without cause, the term “cause” means (A) the Executive’s commission of a felony; (B) the Executive’s grossly incompetent performance or substantial or continuing inattention to or neglect of the duties and responsibilities assigned to the Executive; (C) the Executive’s fraud, misappropriation or embezzlement or a material breach by the Executive of the Idearc Code of Conduct; or (D) such other misconduct detrimental to the business or reputation of Idearc or to the ability of the Executive to fully perform the duties of the Executive’s employment. The determination of whether the Executive’s employment is terminated with or without “cause” will be made in the good faith discretion of the Human Resources Committee of the Idearc Inc. Board of Directors or its designee, and any such determination shall be final, conclusive and binding on all persons.

Time for my soapbox:

Crony capitalists believe that it is acceptable to attempt to manipulate the stock price of a company with false or misleading tactics. I believe in transparency from corporate employers and agents.  Main Street deserves it folks! (It is almost Nov 3rd Elections Time and I am pumped up!)

The poor company has it coming from all angles. Consumer’s hate the industry method of saturation distribution, environmental conscious folks hate the paper waste and tree pulp used when creating yellow pages directories, and businesses see costs increasing and value decreasing. Idearc’s solution to the declining revenue is creating a PPC product that far from being as effective for key advertisers as they claim it is. Idearc does not vSoapbox imagealue organic search on Google which is roughly 70% of all web search click results. Google Maps has also impacted the company’s traffic to Superpages.com’s Network. Is it time for the phone book’s to do more than copy innovations from other Local Internet Verticals like ServiceMagic.com’s Service Guaranteeco or copy ReachLocal’s offering to local SMBs. You know… the Proxy-Site based PPC platform that doesn’t offer analytics (doing PPC without analytics is technically managing what you can’t measure) to the client. Who needs to know what is going on with the website when you have a call report like the phone book. Everything they do is hack work. Sorry, but I left due to the inability of the company to service my clients and not spending my time making “Cold Calls”. It required a significant amount of my time to fix issues with fulfillment. For instance, campaign managers actually go to Google and copy the Adwords campaign messages from Google page results when building ads. They also create generic ads and do not focus on landing page optimization.

If I were investing in the company, I would ask… what does Google offer that you do not? What is Google providing campaign managers that Idearc opts out of with its proprietary system? Does Google have a better handle on PPC than companies like Inceptor which Idearc acquired in July of 2006 during the time the company became its own. (or should I say folks like me invested in it based on the credit markets at the time in relation to corporate debt.)

Maybe this potential buyout by the right party will be a good move for my friends and “family” at the company. I wish you guys luck with SuperGuarantee, SuperSEE, SuperPages, SuperTools, SuperKlein, and the SuperTeam from the antiquated yellow pages whose used to nice fat margins that don’t happen when you service your client unless you quit the “Sales Model” business model.

A word of advice for Paulson,  Don’t be sold as easy on Idearc as the cocksure David Letterman wannabe who likes his drink his Pepsi and cocktail a certain way while having some nonsensical view that advertising in the Yellow Pages is target towards intelligent homeowners.

Here is a video of Scott Klein doing “motorcycle stunts” on Dallas highways in order to pump the sales reps for the future announcement of the fact that the company could not afford the debt Verizon had given it. Scott was so kind that he spent millions to let them all stay at the Sheraton Hotel in Dallas earlier this year for a few days introducing ServiceMagic.com’s ServiceGuarantee as the new Verizon Yellow Pages SuperGuarantee and announcing that he wants reps to have a menu pricing list instead of haggling, they want to charge clients for leads at huge rates that reps today refuse to sell, (almost like selling yellow pages ads that don’t work) and I am sure to cover a few other things.

(Maybe the next ads will be of “EveryDay folks touting of how they used the yellow pages to find something…. gotta love brainwashing folks…. sounds better than a catchy jingle or superheroes or copying companies like ServiceMagic.com)  Things still are not as peachy as the folks a the corporate ivory tower pretend them to be. When it comes down to taking care of the client the company holds very little accountability and while it knew it was having issues taking care of clients it did very little to correct the problems.  (Yellow Pages industry profit margins don’t leave much room for good old-fashion customer service) I really don’t feel that the print and online business can be more than ads based. The company will have a huge challenge adapting to the quick pace of the internet marketplace with social media and changes that the major search engines make. Idearc has very little control when Google holds all the cards (traffic). Why a business owner would sign a 12 month contract for Pay Per Click management is dumbfounding.  When they fail to fulfill the promise that “sales reps” commit to with clients the company pauses your advertising campaigns and you the client get stuck receiving collections calls for a $300.00-$1000.00 per month management fee.

Why do companies feel that they can do PPC better than Google? I have seen what the proxy companies use to fulfill Google Adwords campaign orders and I have seen all aspects of the Google Adwords Campaign Management interface and I will tell you that Google has the market beat. You can combine Webmaster Tools and Analytics from Google and get a great picture of what is going on. The ability to measure and the ability to manage.

The Local Google consultant thing is going to kick the company right in the teeth. Not just me down the road, but what happens when business owners realize that $400.00 per month and no dedicated campaign manager is nuts. For that kind of money you can get SEO advice, Websites and still have money left over to fund Google Adwords.  Only a Yellow Pages publisher would create a rate card for the internet that is as boring as the antiquated Yellow Pages.  You cannot treat the internet like you treat ads in a phone book. Only a yellow page company would get into the internet business via acquisition of a search marketing firm only to end up copying its closest and best competitor. At least with ReachLocal the sales reps are paid residual and try a bit harder service the client. Too bad the sales rep is about as clueless as your average “I know what PPC is but I don’t know how to do it” SALES REP.  Not really the place to get advice on internet marketing is it folks?

Meanwhile, Paulson… if you want to know how to fix the issues in the company, ask the clients.   Good luck with the investment. Time for real change at Idearc! Time for real innovation. Time for folks to stop copying the rest of the industry and be more creative!

If you want to be at the top of Google, the last person you need to speak with is the Yellow Pages! The last thing you need is a 12 month contract for Pay Per Click management.

Pay for the campaign build, pay for the knowledge and help if you need assistance Doing-It-Yourself, pay for options specific to your business needs…….

Oh yeah, and DO NOT ALLOW the Yellow Pages companies to build your small business website. You might just end up with something like this:

http://allactionftworthcarpetcleaning.com (it amazes me that some of the best companies have the worst website, Thanks Yellow Pages!)

When for less money you can have:

http://yourfortworthattorney.com ( template site using open source Joomla Content Management System)

10 Steps to Help Your Dallas Area Business Survive & Thrive During the Economic Recession

Mike Stewart the Dallas Google Guru is here to help!


Idearc Bankruptcy may not pass muster. Approval unlikely according to sources….

October 26, 2009

According to the Dow Jones Financial Information Services:

The New York private equity firm said if Idearc can’t settle its differences with creditors and confirm an exit plan at the December hearing, other parties should be allowed to propose alternative strategies for the company.

In its request, Idearc said it is making progress in talks with unsecured creditors. Even if the company, creditors and lenders can’t reach an agreement, it said the dispute is likely to be settled during a November trial of the lawsuit.

In the lawsuit, the unsecured creditors committee said JPMorgan Chase & Co., the agent for the lenders, failed to properly register certain copyrights. They say that means the lenders don’t hold a lien on Idearc’s most valuable assets, the intellectual property needed to print and distribute phone books.

Idearc was spun out of Verizon Communications Inc. in 2006. The company blamed the $9 billion in debt it took on as part of that transaction for its bankruptcy filing.

So, the real assets for Idearc are:

The name (lol)
idearclogo1

-the + 3000 “talented” and trained sales reps on salary
superpages_logo

Switchboard-logo

This logo is smaller for a reason.

This logo is smaller for a reason.

idearc corporate office hotel

So….. who owns the asset of the Verizon Yellow Pages name? If Idearc Media / Verizon Yellow Pages were let’s say “Being Sued for Executive Fraud” or being under investigation by the IRS for Verizon’s bankruptcy spin-offs??

In my opinion the entire spin-off of the company was a pretty bogus deal by Verizon. It stinks rotten. No offense to the fella who I have never met personally from Pepsi! He seems like a pretty funny guy! I especially love the motorcycle stunts for the national sales meeting in February during the announcement of the bankruptcy filing!

According to the Dallas Business Journal:

Phone directory publisher Idearc Inc. said Friday the U.S. Bankruptcy Court for the Northern District of Texas approved the company’s amended disclosure statement outlining the company’s plans for emerging from Chapter 11 bankruptcy.

Dallas-based Idearc said that under its proposed plan, the company’s total debt will be reduced from about $9 billion to approximately $2.75 billion of secured bank debt, with the remainder of the company’s current bank debt and bonds converted to new equity.

Scott Klein, Idearc’s CEO, said in a statement, “The court’s approval of the disclosure statement and its authorization to begin the process for soliciting approval of our plan, signals the latest step toward emergence from Chapter 11.”

Idearc was created in October 2006 when Verizon spun off its yellow pages and directories division into the standalone company. It was launched with $9.1 billion in long-term debt at its creation. Idearc and its subsidiaries filed for Chapter 11 bankruptcy protection in March.

The question of the day is: Did Verizon know that Idearc could not afford the debt burden when it spun the company off with 9.1 BILLION in debt??