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Jan 16, 2018

Yellow Pages cutting 500 jobs in effort to reduce spending

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MONTREAL -- An iconic Canadian company with roots in printed telephone directories has shed nearly 18 per cent of its workforce in what may be its final attempt to remain viable in the digital age, says an industry expert.

"I think this is it," said Louis Hebert of the University of Montreal HEC business school.

He said Montreal-based Yellow Pages Ltd. has two options -- give itself a little breathing room to develop a new strategy or stabilize the organization for a potential buyer.

"The alternative to these scenarios is the progressive degradation and bankruptcy or a fire sale," he said in an interview.

Yellow Pages has cut another 500 jobs across the country as it continues to struggle with a shift of consumer preferences from print to digital directories.

The company (Y.TO) said the job losses, which took effect Tuesday, are on top of 300 positions that were eliminated in October 2015.

Considerable effort has already been made to transform Yellow Pages, which was founded in 1908, from a publisher of printed directories to a digital model in an era of growing cellphone use.

Digital now accounts for 70 per cent of revenues, but even those have stalled and slightly declined of late.

Hebert said those type of transitions are risky and the Yellow Pages has shown it has been unable to pull it off, especially in the face of deep-pocketed competitors like Google, Facebook, Amazon and Microsoft.

"They have the same problem that newspapers or magazines where basically the whole environment has shifted to something else," he said.

Hebert said the turning point was when Bell Canada sold the operations in 2002.

"Their bread and butter has disappeared. In fact the whole purpose of Yellow Pages has disappeared."

A revolving door of executives have tried to stabilize the company by moving to digital, but the speed of change of their environment has meant they were always playing catch-up, he said.

Yellow Pages chief executive David Eckert said the decision to cut jobs is difficult but "absolutely critical to securing the near-term health of the business while we build a great company that provides excellent opportunities in the future."

"Today's actions are one element resulting from a comprehensive review of our operating and capital spending, aimed at creating a strong financial basis for stability and growth," he said in a statement.

Yellow Pages said it expects to take a $17-million restructuring charge related to the decision.

Company spokeswoman Jolle Langevin said cutting jobs to reduce expenses is one of several measures that have been considered and other moves could still be announced.

"Everything is one the table," she said.

Analyst Vahan Ajamian of Beacon Securities Ltd. said investors will be encouraged by the "no nonsense" attitude taken by Eckert in more than three months since being appointed.

In addition to cutting costs, he has restructured the company's debt.

"I think those are positive signs but investors have to see what the outlook for the year and then the future holds," he said.

Ajamian said the latest moves could position the company to sell some or all of the business.

"That could be what the new CEO's mandate is," he said. "There's definitely talk about selling some of the non-core acquisitions that they've made and/or the company as a whole."

In addition to the Yellow Pages print directories, the business is a digital media and marketing company.

Its online properties include YP.ca, RedFlagDeals.com, Canada411.ca, 411.ca, Bookenda.com, DuProprio.com, ComFree.com and YP NextHome.