Look here John, sorry to tell you this, but they lied to you.

November 18, 2010

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“What a tangled web we weave, when first we practice to lie and deceive…”

Just got back from the Dallas/Fort Worth Search Marketing Association http://www.DFWSEM.org meeting. You won’t believe it but the attendance was over 150 people tonight! The topic was the State of Search, featuring a gentleman from a Search Engine News Website and with two wonderful young ladies from Google and Bing. Very exciting stuff for search geeks like myself.

So… however that quote goes, has it never been more true  than in the advertising sales business.

You ever go out and tell a client what they are really getting from the service you provide? If you do it with an absolute clear conscience, you know, kinda like the feeling of helping someone down on his or her luck, wouldn’t you think you and the company you keep should be rewarded with this clients future business? Companies that can do this well have a great product or service to offer. Companies, like those that report phone book usage is down from 25% to now 11%, but then claim that they want to “opt themselves” out of paying a State mandated (so to speak) “tax” that requires them to produce a product that consumers don’t want or use, yet they then want to sue for the “freedom of speech” to saturate homes with unwanted industry waste… is that not pot meet kettle or what? The business practices of what was once an honest profession are disturbing. It is not all publishers. The problem is really all publishers combined. Take for instance my zip code, if you visit the Yellow Pages Opt Out site you will see that my home receives 4 different yellow pages company products, which equates to 6 books a year worth of collective waste. I wonder how much useful wood chips are being wasted? It is not like they are keeping legal citizens on payroll distributing the waste anymore? Have we officially handed phone book distribution responsibilities to illegal immigrants? I guess if the garbage man who doesn’t speak a lick of English can remove the phonebook trash for free, at no cost to the publishers, I am sure it won’t hurt for his Wife to keep busy littering our porches with them? Probably not the intent of the design behind the recycle symbol circle on your phonebook, but it sorts takes on a whole new meaning huh?

John Paulson is a smart man for booting SuperMedia CEO Scott Klein, and his two EVPs out of the company. Time to make room for DexOne management. DexOne folks didn’t subscribe to the Verizon/Idearc way of cheating. With the bankruptcy of Idearc, FairPoint Communications, and Hawaiian Telecom, Verizon should be held liable for unloading massive amounts of debt free and clear after two years outside of the nest, especially considering the knowledge of mobile smart phone advancements and patents. Considering the timing of the bankruptcy, one has to question the integrity of the investors and executives, whom did an excellent job of raising executive salaries while demanding subordinates take massive paycuts and benefit reductions. I guess we should ask Congress to do the same too? It is not like the 545 folks that run our federal government ever get fired for doing a crummy job?

What does this have to do with Google?

Product advancements in search come from ideas. Problem solvers combined with engineers and designers who create amazing solutions and verticals for just about any consumer need. The best that the Worlds first and once most respected “internet technology” companies, the yellow pages industry veterans, could create was an online version of the printed product. Nothing more, nothing less. That was because they, like most other intelligent businesses, understand how to carve a niche. Too bad ethics and technology passed them up. Companies like the one I used to work for are inundated with mid-level sales managers, high quotas, fat profit margins, nepotism, excessive executive compensation, and a lack of focus on change. Just because you are relevant today, doesn’t mean you will be relevant tomorrow.  The YP industry lacked the foresight to see the near future. Even paid search was a rush it to market solution with an inferior product like SMLocal that didn’t incorporate the tools from Google’s UI and AdWords Editor desktop applications. What we got was a cheap investment of the BidCenter tool from the purchase of Inceptor vs true software as a service (SAAS) solutions or platform planned and engineered application, such as those from companies like ReachLocal.com. To build a massive search marketing company you must find a way to embrace a holistic methodology to search and social, stay transparent with cpc/cpa and offer measurement tools and reporting such as Google Analytics.

The next step is to incorporate content strategy, and then after dotting i’s and crossing all the t’s you get to sales. Not sales and then a wonderful and almost preplanned game of hot potato by the outsourced and overworked/understaffed fulfillment department. Beuller? ANYONE want to take some accountability for the clients problems? Your CEO must be on the same page as your head engineer and his team of programmers. This is the side of corporate that deserves investment. Clearly not what Verizon chose to invest in with its Yellow Pages division Verizon Information Services.

Do you know why two terrible companies, or expired business models combined, just make one really bad company or idea?

John Paulson’s Hedge Fund was lied to by yellow pages executives. Now Mr. Paulson’s fund managers are making plans to turn yellow lemons into lemonade by combining the administrative and management expenses of SuperMedia and DexOne. I guess that is what most people hope, just because some monopolizing of the printed yellowbook business would be a good thing for porches everywhere. So the plan is to cut costs, merge resources and expenses, kill white pages, and then sell whatever is left back to investors or bondholders, but not at 40 bucks a share and the thirty some odd dollars per share they shorted the way down…. does this ring a bell folks? Gotta love crony hedge funds as much as crony capitalists right? I guess you deserved to be lied to… that is what you get for backroom deals to rob shareholders on bankruptcies of a dying business model before the companies had the opportunity for fresh and creative leadership to take a shot. Too bad when Verizon Yellow Pages and Idearc Media was spun off of big Verizon that big Verizon didn’t get to keep the crony leadership team from Kathy Heartless…. errr I mean Harless.

Maybe they need to just stop pretending they are so Super and actually do what is needed to become it… invest in something… anything. Just RIF the entire Verizon Management Team and start fresh… or do what Local.com did and buy a company like Octane360 for a basic SEO offering? Heck, you can’t do worse than BidCenter/SMLocal and Business.com. (lol)


What do Idearc, FairPoint, and Hawaiian Telecom all have in common?

October 9, 2009

Here is an article that I have been biting my knuckles trying to keep quiet about.
WSJ Comments On Idearc Bankruptcy & Verizon Culpability : Natural Search Blog

Posted using ShareThis

I read this article via a former employee of Idearc, one the Search Engine Marketing Industries most respected SEO consultants and who many believe to the the foremost experts on Local Search Marketing in the World, Chris Smith. Chris was formerly head of Idearc’s Search Engine Marketing team on the fella that helped put Superpages.com on the first page of Google. Chris did a tremendous job in the early day’s of local search beating other Internet Yellow Page Sites, such as YellowPages.com and Local.com (competing with keyword rich domains in the space is a challenge)

So the question is…. what do Idearc Media, FairPoint, and Hawaiian Telecom all have in common? They are all companies that Verizon spun off to fund Wireless and Fiber/TV/FIOS initiatives. Chris states, “Verizon might have some responsibility for the bankruptcies of Idearc, Hawaiian Telecom and FairPoint Communications”.

He also states:

In the case of Idearc, the business unit was too small to cause the great corporate mother ship to founder, and it’s the Verizon spin-off debt load it was saddled with that caused it to be unable to function in the first place. He misses the point that Verizon took too much money out of the spinoff deals. Those weren’t existing debts associated with those business units prior to their divestment.

These companies wouldn’t have “gone under” within Verizon. It’s possible that if a business unit starts to lose money for a quarter or two, the board would naturally require it to correct itself in some way.

I completely agree. I also think that the folks that worked for Ivan at Idearc at the time were over eager to accept whatever deal they could in order to be relieved of the burden of being under the Verizon direction. I don’t think it was smart of Kathy Harless and her team to take on such a debt burden…… seriously, over $9,000,000,000.00 for a company that has been losing its business to Google and Yellowbook and other competitors since 2001? It must have felt very confident on new product ideas such as Solutions at Home, Solutions Direct Mail, and Solutions on the Move! Nonetheless, the company would have never been able to create these new ideas and products under Verizon. Verizon used the Yellow Pages division as a cash cow to fund other ventures, then did it again when it unloaded debt on the smaller divisions.

I have a site that I am going to build: http://www.YellowCrooks.com, as I recently purchased the domain thanks to the idea from a former co-worker. He gave me the idea while being forced to watch an hour long rediculous “cocksure” video about sales, sales, and more sales. In my opinion sales was not the issue. The product offer and fulfillment was the major problem. (I have the credentials to state this since I was regarded as the most knowledgeable internet media consultant in the company {hey a FIGJAM moment for myself} and also have 3 President’s Awards for “Sales” in my 6.5 years in the division.) With the site I want folks to discuss what Verizon did. With all the transparency about Countrywide Mortgage and other recent events…. .why not?

Chris continues to state:

But, arguably these companies experienced a much higher degree of financial problems due to the extremely high debt they were required to service subsequent to spinoff. These spinoffs funded Verizon’s FiOS expansion — a gigantic project that was paid for by Verizon offloading the investment costs to the companies it spunoff.

It will be interesting to see if the Securities and Exchange Commission gives Verizon a pass on their spinoffs of bankrupt companies as Newmark seems to think reasonable, or if they don’t respond in some way to consumer and state government complaints.

In my opinion his comments are exactly why Idearc will have issues completing the bankruptcy. If I recall the company is going to come out with approx. 3 billion in debt when it emerges in Dec09/Jan10.

According to WebWire Press Release:

Idearc filed for voluntary chapter 11 bankruptcy in order to renegotiate its debt. Although Idearc was not technically bankrupt with over $500 million cash in the bank and net cash flow of $300 million per year, the weak economy spurred creditors into lowering the outstanding debt from $9 billion down to $3 billion along with more flexible payment terms. One of the terms is that Idearc give anything over $150 million in their bank account to creditors in order to pay down the $3 billion in debt. Essentially, Idearc will always have $150 million in the bank and anything over that will be taken out to pay down debt. Idearc’s 3 billion dollar debt has a note rate of 12%, the annual debt service is $360 million dollars, about 12.1% of 2008 gross annual revenue. The creditors/lenders have already approved the reduction in debt. The company is now waiting for approval from its board and the bankruptcy judge. According to the new deal, Idearc must give the creditors $250 million from its cash reserves as a sign of good faith. This will put Idearc’s cash position at approximately $250 million after the deal is completed

I hope the folks at the Downtown Courthouse in Dallas are taking all this into account! I know the counsel for the unsecured creditors is sure going to put pressure on fiduciary responsibility of Verizon. But in my opinion (or should I say prediction is) Verizon will probably buy Idearc back in some Bernie Madoff type crony deal and leave shareholders with pocket lint. Why? Because this is America! Heck, Verizon offered a separations package to folks that left the company and put it in writing that folks would not be hired back, yet these folks were later rehired after taking the Voluntary Separation Package with very nice severance packages. Do I blame the cocksure guy from Pepsi? Nope! Not for the burden. But it kinda makes me think of folks saying that Obama is not to blame for Bush’s choices. Well….. that might not be a good example…. or might just be?? Obama’s choice to put my kids in debt with the “Spendulus Plan” and Bail Outs might compare to turning “America’s local ad agencies” into a telemarketing service or abandon the internet business in favor of trying to keep the print alive. Honestly I have heard rumors (like I said!!! RUMOR!!!) about Idearc not wanting to stick with the .com product it offers since all it can muster is riding the coattails of Google and Yahoo in search. Margins in print make it easy to have 3000 “sales” reps. The smaller margins in .com might move the company towards that of a Media Buying Ad Agency and the company might follow in Google’s self automated pricing structure. Why should prices of ads be so darn “negotiable”?

I’d go a bit further and also agree with Chris and state “that if it looks like a rat and smells like a rat, it’s a rat”.

In the meantime….. y’all wish me luck….. I am hoping to start a company doing what I do best……

HELPING DALLAS AREA BUSINESS OWNERS REACH THE TOP OF GOOGLE AND MAKE MONEY!

Oh, yeah…. I think I am going to offer to create PPC campaigns for FREE and not charge a management fee or have you sign a contract…. Might be the wave of the future. Call me for details. FREE Google PPC Campaigns are subject to me providing my SEO services. Although technically I am not in business… maybe I can show folks how profitable SEO can be!