Yesterday, Yellow Pages announced that CEO Julien Billot had resigned, effective immediately, and that CFO Ken Taylor would take the reigns of the company while it looked for a permanent successor.
“Yellow Pages is a profitable business that delivers innovative digital products to small- and medium-sized enterprises across Canada, with strong cash generation and a leading market position,” said board chairman Robert MacLellan. “We believe that Yellow Pages can do more to deliver on its potential by placing greater emphasis on operational performance, execution and shareholder returns.Since 2014, under Julien’s leadership, Yellow Pages successfully transitioned to a business that now generates approximately 70 per cent of its revenue from digital, an important achievement. We thank him for his efforts and wish him success in his future endeavours.”
Galappatthige says among another things, the situation at Yellow Pages shows just how difficult it is to find digital media talent in Canada. The analyst says he will be watching he refinancing of the company’s senior notes closely and suspects this will delay the process. He thinks Yellow Pages shareholders would be best served by the pursuing a sale at this point, but reiterates that he was not taken off guard by yesterday’s developments.
“Management change is not entirely surprising: Shareholder confidence has been eroding significantly following the sharp downturn in financial outlook in early 2017 and the resultant collapse in share price,” he says. “In that backdrop, we are not entirely surprised by the decision.”
In a research update to clients today, Galappatthige maintained his “Speculative Buy” rating and one-year price target of $8.00 on Yellow Pages.