Comments on: 1x Yellow Pages = 3.2x Trade Me

By: Valuecruncher « Rowan Simpson

Valuecruncher « Rowan Simpson — Mon, 02 Jun 2008 07:43:40 +0000

[...] sense. But, how do you know if 12x is the correct earnings multiple to use? As we’ve seen this number can vary quite a lot depending on the [...]

By: Keith

Keith — Thu, 26 Jul 2007 07:44:50 +0000

It will be interesting to see if consumers continue to want listings, or become more interested in going straight to transaction. Tradesmen represent the bread and butter of Yellow Pages – but why look up a phone number online, when the likes of http://www.builderscrack.co.nz can allow you to transact with them directly?

By: Trade Me vs. Yellow Page Redux « Rowan Simpson

Trade Me vs. Yellow Page Redux « Rowan Simpson — Wed, 02 May 2007 05:31:24 +0000

[...] Me vs. Yellow Page Redux Published May 2nd, 2007 Trade Me , General My previous estimate was [...]

By: Valuecruncher » Blog Archive » Trade Me - The Private Equity Valuation

Valuecruncher » Blog Archive » Trade Me - The Private Equity Valuation — Mon, 23 Apr 2007 22:07:53 +0000

[...] The question has been asked – does 1 Yellow Pages = 3.2x Trade Me? [...]

By: James Graham

James Graham — Mon, 02 Apr 2007 01:51:51 +0000

I actually think yellow pages online future is far from certain and that Telecom is selling at the right time. The future for business directories is undoubtedly online but why do people presume yellow pages is the favourite to dominate it? Personally I would pick TradeMe.

Why? Traditional business directories are a classic natural monopoly, they get more efficient the larger they get thus creating large barriers to entry for anyone else. The internet destroys some of these barriers, no need to design, print and deliver a book to every house in the country for one. No teams of salespeople to sell the ads or type them out and so on.

Online this task is trivial, I designed myself a directory site in a week albeit a basic one. It was of course a failure because what really matters online is users and who has them in NZ? TradeMe.

They could easily add a tab to their websites with “Directory” and provide their 1m users a free service to add details about their own businesses with far more information for each than yellow pages provides. You could even have a rating system like http://www.nocowboys.co.nz and of course charge for premium listings/ads.

At the very least online their will be (in fact already is)competition which traditionally Yellow Pages has not had. Yellow Pages has a high error rates, charges and lengthy time lags to make changes/corrections all signs of a big fat slow monopoly. In short they are a sitting duck for an established internet player to attack.

By: Sam

Sam — Sun, 01 Apr 2007 21:45:02 +0000

Valuecruncher’s estimates of $250 million (2006) and $300 million (2007) of revenue for Yellow Pages were based on limited publicly available information in November 2006. Following the announcement of the transaction it has been revealed that Yellow Pages will have revenues of $280 million and EBITDA of ~$160 million for the year ending 30 June 2007 (http://www.stuff.co.nz/4006129a13.html). The sale price of $2.24 billion equates to 8 times projected revenues and 14 times projected EBITDA.

By: Rod Drury > $1

Rod Drury > $1 — Fri, 30 Mar 2007 20:03:58 +0000

[...] What does this say about the Telecom management? Clearly there is value there that Telecom couldn’t extract. Directories is one of their few content assets and a formidable platform for high value economic commerce. They didn’t even do the basics. [...]

By: Dylan Bland

Dylan Bland — Wed, 28 Mar 2007 21:15:27 +0000

$2 billion should keep Ferrit going for a few more years :P

By: Stu Fleming

Stu Fleming — Tue, 27 Mar 2007 23:40:13 +0000

Hey! We got the $2bn of economic growth without having to upgrade broadband and run fibre everywhere!!

By: Glen Barnes

Glen Barnes — Tue, 27 Mar 2007 22:57:28 +0000

The Yellow Pages Group is in a classic situation of an old media company trying to deal with the internet. The problem they face is that they have to reduce short term profits to real the rewards later on. Take for example a search for ‘Builders’ in ‘Wellington’. The results show this:

http://yellowpages.co.nz/Pages/Search/Results/0,2878,a6001_m0,00.html?category=builders&businessName=&location=wellington&findit.value.x=0&findit.value.y=0

Is there a reason why Signature Homes comes up first? Why only some listings have an email address even though the hosted site has an email address on it? It comes down to paying to get your listing to the top and paying for ‘extra’ features such as listing your email address.

This is a classic old school way of looking at things. In the past people only had the paper Yellow Pages to look at and the big ads made a difference in how we looked at it. On the web however we have plenty of choice and the site that delivers the most relevant results the fastest will win in the end. What that means is providing the user (not the advertiser) with the most relevant complete results that they can use to find a business.

Once a site has this then and only then can they look at monetizing on top of the core listings. In Yellow Pages case I think they should put the paid for ads on the side. If signature homes wants extra visibility then sell them a small display banner next to the results. There are heaps of ways to make money of a high traffic directory listings site.

I can think of another example where an old media company crippled their website and new player came and took the market by just delivering what the user wanted (One guess…)

You are right. It is their game to loose.

Glen