SuperMedia Ships Jobs to India….. but Scott Klein Got His Bonus!

January 3, 2010

Have you seen the latest headlines about SuperMedia? (on October 5th 2010, SuperMedia CEO Scott Klein resigned, visit YellowCrooks.com’s forums for more info and participate in the discussion.)

Idearc becomes SuperMedia on Jan. 4 2010, meanwhile the Yellow Pages publisher lays off 150 workers in St. Petersburg Florida.


Idearc Media is now SuperMedia

Still $2.75 Billion in debt!



SuperMedia, the company that publishes the Verizon Yellow Pages, is laying off 150 employees in St. Petersburg and shipping the jobs to India.

Idearc / SuperMedia has been trying to emerge from Chapter 11 bankruptcy and sees the outsourcing and layoffs as a cost-cutting move.

About 245 people work for Idearc at its phone directory business at 10200 Dr. Martin Luther King Jr St. N in the Gateway business district of St. Petersburg.

Idearc said it will keep about 90 people in St. Petersburg as it transfers much of its publishing business to Tata Consultancy Services of Mumbai. Idearc plans to hand out severance packages as employees are dismissed in phases through next December.

“There are no surprises. In November, we told the staff in St. Petersburg what was happening,” company spokesperson Andrew Shane said. Idearc is also slashing jobs at phone book publishing operations in Los Alamitos, Calif., and Everett, Wash.

Based in Dallas, Idearc spun off from Verizon in November 2006. The $3 billion company distributes about 127 million phone books and owns Superpages.com.

The phone book business has been shrinking at accelerating speed. Between 2005 and 2007, the number of Yellow Pages printed shrank by 1 billion to 13.4 billion industrywide. In a plan circulated to creditors, Idearc estimated its printed book revenue would be cut by more than half to $1.6 billion between 2004 and 2013.

Idearc/Verizon Yellow Pages

Print revenue

2004: $3.5 billion

2006: $3.0 billion

2008: $2.7 billion

Projected 2013: $1.6 billion*

Online business:

2006: $230 million

2008: $300 million

Projected 2013: $598 million*

Industrywide classified yellow pages printed:

Down 1 billion to 13.4 billion between 2005 and 2007

* Best-case scenario

Source: SEC and court filings

Kinda funny. Internally Idearc is going to list Paulson & Co. as an investor on the site. Idearc forgets that Paulson picked up its share of Idearc for pennies on the dollar. Meanwhile if you noticed what Google was considering purchasing YELP for, it makes me laugh at the markets evaluation of Idearc. Just in-case you are not familiar with the situation, SuperMedia (formerly Idearc, which was formerly Verizon Information Services, which was formerly Bell Atlantic & GTE Yellow Pages) is emerging from a pre-planned bankruptcy.

Scott Klein, like many crony CEOs and Executives, has “lined his own pockets,”  and has “feathered his own nest” by hiring “cronies.”

It was obvious to me that Scott Klein planned bankruptcy the moment he took over Idearc in June of 2008. What folks from the investment community are unaware of is the example of corporate leadership that he has set since he took over reins as the companies CEO. SuperMedia (still working on getting used to saying the new name) operates on bi-weekly pay cycles. Media consultants and earnings are rolled in periods consisting of two weeks called “Pay Periods.” During the first part of 2009, Scott Klein instructed sales managers not to report losses (decreases and cancellations) for Pay Periods 12 and 13 of 2009 to make sure that “upper management” would get the semi-annual quarterly bonuses. SuperMedia sales reps were instructed by management not to report cancellations or decreases in order to make sure that the crony executive team and mid-level managers qualified for the incentive payouts for the period ending pay period 13. I was very disturbed by these actions as an Idearc media consultant. You see, as a yellow pages publisher, it is easy for SuperMedia/Idearc to manipulate the revenue that it reports to investors. All Idearc executives need to do to meet a bonus period is wait to report losses and cancellations. What was even more unique was that these instructions also included direction from executives on reporting the losses on pay period 15 and not dumping them all in pay period 14 which was what you normally saw while they reported earnings to Ivan Seidenburg at Verizon. I assume the company’s Board of Directors was paying close attention to this potential manipulation.  Now let me state that I specifically recalled this happening on a few occasions while at Verizon. The difference with Scott Klein, it was a directive that was company-wide and only a few months after him taking over. Maybe he was just taking advantage of the “quiet period”? Post bankruptcy, Idearc is no longer going to be financially liable for these actions and ramifications to retirees and investor’s 401k’s, pensions, and stock portfolios.

Did Scott Klein purposely default on the companies credit facility debt to enter into bankruptcy? Considering the amount of cash on hand to make the payments….. YES HE DID! That is one of the reasons the company was sued in January and April of 2009.

I am confident that the personal lawsuit against Klein and his executive team will have a dramatic impact on the future of the organization. Just as Mike Leach is no longer the coach of my beloved Texas Tech Red Raiders for his actions, I am sure that Scott Klein will no longer be the leader of SuperMedia in the near future. If Paulson does not take control of the company and put someone more capable (such as Scott Laver) at the helm of SuperMedia, it will sink faster than a torpedoed ship. It is time for SuperMedia to cease crony executive leadership and “YellowCrook” WallStreet stock manipulation. Time to come clean. Time to become more creative. Time to make a commitment to become “SuperMedia” vs just lip-service. Time to put clients and service above sales and earnings. You build it….. they will come! You get the idea!

From 2004 to 2010 Idearc Media will shrunk from 3.5 billion to approx 2.5 billion. From 2010 to 2013 the company is projected to shrink another billion. Considering the company is doing a poor job of competing in a fragmented local search market and the usage of print directories is expected to drop even further (thanks to a wonderful tool such as the mobile web browser) I would expect to see continued outsourcing and cost cutting measures. The unfortunate thing is the company has many of the tools and people it needs to turn around, but with continued mismanagement from executives who do not fully understand what business owners want in a local ad agency, I foresee continued client churn and lackluster results in competing against other internet marketing offers.  Idearc does not seem to understand that you can not put an axe over a clients head to keep or pay for a poor performing internet product. The axe that the threatened local advertisers with to convince them to keep their placement in the print yellow pages does not work online. SuperMedia’s SMLocal product is, in most situations, a 12 month contract (at least the sales reps push you to sign for 12 months, thereby locking you into the companies costly management fees) and that just does not work for an internet offering. Why 12 months for Internet Advertising that can be changed daily, unlike a printed yellow pages advertisement. The company does not offer the client the ability to own the work and campaigns it creates on Google or Yahoo search engines. If they build your website, you never own it. Ownership is possession even after cancellation. In the event the company fails to fulfill the promises delivered to you by sales representatives, you are still required to pay for management fees, since your sales representative was paid a commission. I call these sales “Monopoly Money.” They look great on paper (considering a $2k/month budget for clicks and $800.00 per month management fee is really only $800.00 per month to report to investors) but horrible after they are reported. Maybe they need to just report sales on the monies  it actually collects from advertisers vs just the ink on the contract. Maybe they ought to pay “Media Consultants” for revenue and service to clients vs ink on the contract? Of course we know that when you are a large organization, with a very large resource of collections attorneys and agencies, it helps to work with ambiguous contract terms and conditions.

Once the company addresses core issues with its product offering,  if resolved, (although the company may potentially give up something financially in the short-term,) they will gain long-term in reputation and reduced client churn.The company needs to get web developers and marketers in the field vs sending web development work to India. You will be amazed at the difference a search engine marketer, a local CMS based website developer, and client can produce together vs a “Indian” (are folks from India called Indians?) website developer. After all, website companies that have margins like print yellow pages companies, are doomed for failure. How can they compete with local boutique web marketing firms? How can they produce the same level of service and attention to detail? Do all businesses need this level of service? I don’t believe so. I just don’t understand why a client would choose something else? The reason churn is high in a fragmented local search market: Clients have options! Unlike the print industry, which is dominated by major players, unless Google puts out a simplified internet offering, people will continue to see fragmentation in local search. Kind of like the fragmentation the yellow pages industry has experienced since the decline of print (thanks to the  increased amount of competition in the space.)

You piss off your client = You lose your clients investment for future years. You lose a client, you run out of options to replace them.

Over the years, Idearc executives discovered new options to replace the clients it lost as Verizon by recently changing the company’s credit policies. If folks owed money to Verizon Information Services, after a certain period of time, the balance was forgiven by Idearc. This was, what I consider, blatant attempt at earnings reporting and manipulation. Why would you give someone who has never paid you a dime for advertising a second chance? Oh, I know! You want more monopoly money on the books to get your bonuses! Those contracts that your sales reps bring back in the office, you know… the ones your talk about in meetings and management conference calls, do not mean anything to investors like Paulson & Co. They do not mean anything to clients. They are only important to commissioned sales reps and crony executives and managers looking for fat bonuses…..reminds you of other Yellow Crooks huh? Like the folks at WallStreet Banks and Countrywide Mortgage/Enron Executives?

Let’s see how long this kind of leadership continues?!

Let’s see if someone investigates what happened in Pay Period 13, 14 and 15 of 2009, or if the company’s executive and mid-level managerial leadership gets away with another form of corporate fraud.

Maybe SuperMedia needs to consider firing sales reps who get paid to produce “Executive Bonus Monopoly Money” and begin hiring Search Engine Marketers who can service clients local search marketing needs, you know, since the internet is the wave of the future and all?

Here is to Idearc…. errrrr, I mean SuperMedia and Scott Klein…..

May 2010 be a great year. The lives, careers, and financial freedom of thousands of Media Consultants is on your shoulders. May you make choices and decisions that positively impact your clients, employees, and investors. Let’s end the old tricks of the yellow pages industry.

Happy New Year!

too bad 7 out of 10 people prefer not to get another phone book and the phone book companies don’t care. Meanwhile we must dispose of the waste ourselves. OPT IN vs OPT OUT!

Here is the Scott Klein Lawsuit:

Scott Klein Lawsuit for Securities Fraud SEC


Fake Yellow Pages Ads Hurt Your Business

December 8, 2009

Recently I called a few paving companies in Dallas to inform them of the new ad in the front of the book. I wanted to see if they were aware of what had taken place. I was shocked to find that a large percentage of the numbers in the Paving Contractors heading for new ads either do not work, are not real businesses, or they state wrong number when you call. Is this due to sales fraud at Idearc (which was obvious while I was with the company) or is this just a representation of all the errors in the phone book? Take a moment and make a few calls and find out for yourself.

This practice, from both the sales and advertiser perspective, hurts the perception of the value of the yellow pages as a resource, but advertisers that do not pay for advertising also takes phone calls from local paying clients. The industry needs to look at a method of monetizing all calls as well as reducing the fraud and abuse of “sales reps” vs real media and advertising consultants. I recall while at Idearc in Texas a few Hispanic reps explained a process of working with “day workers” and pre-paid cell phones to place ads under headings that did not have credit restrictions and these individuals basically offered the day workers help in creating a new company with $850.00 per month worth of advertising in the Greater Dallas directory.

Not the direction the industry needs to be heading. With so many issues to deal with, sales fraud and advertisers cheating the company by taking calls from other paying clients is not what they need to succeed.


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


Another Lawsuit caused by bankrupt yellow pages company Idearc Media

December 1, 2009

from MarketWire:

Retirees Charge Verizon & Idearc With Illegal Pension Switch

Involuntarily Switched to Financially Challenged Spin-Off Pre-Bankruptcy

DALLAS, TX–(Marketwire – December 1, 2009) – Telephone company retirees have filed a complaint for proposed class action relief under the Employee Retirement Income Security Act (ERISA) charging that they and over two thousand others were involuntarily switched in November 2006, post-retirement, from the financially secure Verizon Communication Inc. (NYSE: VZ) pension plans to pension plans sponsored by a newly spun-off company, Idearc Inc. (PINKSHEETS: IDARQ).

Less than 2 years after Verizon transferred the retirees, Idearc encountered financial problems and began cutting back various earned retiree benefits. These benefit reductions were not experienced by retirees remaining in Verizon’s pension plans. In March 2009, Idearc filed for Chapter 11 bankruptcy.

In mid-November, 2006, after each Plaintiff had been retired for at least ten years, they together with more than 2,000 others were involuntarily reclassified and switched into pension plans run by Idearc. All three Plaintiffs were fully vested in the Verizon pension plans with rights to continued payment of monthly annuities and other Verizon welfare benefits. No party received any Plaintiff’s consent to be switched over to Idearc’s pension plans. From the point of the spin off, concluded on November 17, 2006, Verizon treated the retirees’ rights to the usual Verizon retiree benefits as being terminated.

Plaintiff Philip A. Murphy, former President of CWA Local No. 1301, a resident of Mills, MA, retired from a predecessor of Verizon in 1996. Plaintiff Sandra R. Noe of Ipswich, MA and Plaintiff Claire M. Palmer of West Newton, MA both retired from predecessors of Verizon in 1995 and had for years been participants in Verizon pension plans. None of the Plaintiffs had actually ever worked for Idearc.

When retirees tried to administratively challenge their involuntary transfer to Idearc and its pension plans, without going to court, the respondent companies stonewalled and missed mandated deadlines to respond to the retirees’ internal claims. The retirees’ proposed class-wide administrative claim sought to remedy the mistreatment accorded to both non-management and management retirees who have suffered tremendous losses not suffered by their fellow retirees who were not transferred to Idearc. The respondents refused to treat Plaintiffs’ internal claims as class-wide claims.

Therefore, Plaintiffs filed a proposed class action on November 25, 2009 in the U.S. District Court for the Northern District of Texas, Dallas Division. The Complaint filed in Civil Action No. 3:09-CV-2262 charges pension plan administrators with numerous ERISA violations including:

— Failure to provide requested plan documents;
— Breach of fiduciary duty for refusal to disclose pension related plan information;
— Breach of fiduciary duty for failure to comply with pension plan document rules;
— Various other ERISA violations justifying court ordered declaratory, injunctive and other equitable relief;
— Unlawful refusal to make payment of Verizon pension plan benefits; and
— Unlawful interference with retirees’ rights to receive Verizon retiree pension and welfare benefits.

The Federal Complaint states that when Verizon transferred hundreds of millions of dollars in surplus pension assets to Idearc in November 2006, no pension plan language identified and traced the transferred monies to actual liabilities owed to particular plan participants for the payment of pension benefits. When Verizon conducted the transfer, there were no existing plan terms giving the plan sponsor or any other entity the authority to change the status of the retirees.

“What Verizon did to these retirees is disgraceful,” said C. William Jones, who heads the Association of BellTel Retirees Inc., (www.belltelretirees.org) a retiree activist organization. “They are ducking a fiduciary responsibility to employees who gave decades of service and earned these benefits. These pension funds were set aside over the years for the benefit of employees who worked 20, 30 or more years and earned their pensions over their careers. It is reprehensible to refuse to provide plan documents so retirees can make informed judgments on the state of their pension plan and other benefits which they earned during their working years.”

The Complaint asks that all retirees who were transferred to Idearc be put back into Verizon’s pension and welfare benefit plans. It also asks that Verizon’s and Idearc’s pension plan administrators be order to pay a daily penalty for failure to timely provide requested records. The Complaint is posted at the website for the Association of BellTel Retirees, Inc. See: http://www.belltelretirees.org/index.php?option=com_content&view=article&id=33&Itemid=32

Plaintiffs’ counsel can be contacted at: CurtisLKennedy@aol.com

Almost as bad as employees getting shoved into company stock………………….. Sure they will match it, but as long as the company continues with accounting tricks so Wall Street and Main Street do not know what is really going on with the decline of yellow page usage, you will never see a positive return on the investment. Unless of course you get friends to do some insider trading while hushed during a “Quiet Period”. Someone is laughing all the way to the bank! More to come later folks!


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??


Idearc Execs Sued for Fraud via Dick Larkin at YP Commando

October 13, 2009

Idearc Execs Sued for Fraud

Posted using ShareThis

Short and sweet: Scott Klein said that the company was having issues with collections due to a change from “the phone company” bill to Idearc direct billing. He also stated that they had issues with receivables in 2008 from relaxing the credit policy in 2007 (which I can confirm was something that was not disclosed to investors but only sales consultants.) Klein and his treasurer Dee Jones failed to mention the relaxed credit policies in 2007 after the switch from Verizon billing. This had a direct impact on bad debt. Klein violated securities and exchange rules by not disclosing the relaxed credit policies. The stock dropped 40% after he mentioned the decision he made in 2007 to relax credit policies.

Idearc CEO Scott Klein is not committed to the level of transparency that investors need to make proper decisions on whether investing in Idearc is beneficial to them. I have a feeling that he will not be with the company after a new investor takes over majority share of the company.

The companies executives failure to disclose information to investors does not surprise me. The company fails to discuss issues within the sales organization such as racial discrimination (Spanish Yellow Pages sales commissions in Texas) as well as racial discrimination by Scott Klein’s henchman Jesse Vickers who is black and targets folks that are “white.” It is well-known that these and other issues exist within the sales organization.

I believe that Idearc has a “way-to-heavy” amount middle management people in the way of fixing the company’s customer service issues. When a problem exists, instead of the problem going straight to the person responsible for resolving the issue, the problem is sugar-coated by middle management and the client is left with a bad taste in his/her mouth regarding the way the problem was resolved or lacktherof. Idearc fails to ask the right questions from sales reps and clients. Surveys do not work. Workers feel that survey responses may have a direct impact on employment. The environment in the organization has not been positive since the company has been in the hands of Klein and his cronies.

In my PERSONAL opinion, Scott Klein is just like Obama.  He says what he can to make you think the way he wants you to think, but his policies and acts do not mutually benefit Idearc’s clients, investors, or employees. How many of his announcements and promises made back in the February National Sales Meeting have he actually been successful and made improvements to the company? He is full of crap if you ask me.  The best he can do is create a new gimmick for sales consultants, advertisers, and consumers to be duped into believing is original. Klein copied ServiceMagic.com’s ServiceGuarantee and rebrand it the SuperGuarantee.