Not so Super Earnings to Warrant Big Bonuses, Super Secretive Too!

Print
PDF

Written by Mike Stewart | 13 May 2010

AddThis Social Bookmark Button

SuperMedia (NASDAQ:SPMD - News), a decreasingly less important advertising agency for local small to medium sized businesses across the United States, reported first quarter 2010 earnings on Tuesday, May 11, 2010. Earnings for SuperMedia narrowed to $143 million from $243 million last year. Loss per common share for the period widened to $9.56 from $1.66 a year ago. Non-GAAP net income amounted to $25 million compared with $26 million in the prior year period. However, non-GAAP net income per share increased to $1.69 from $0.18 a year earlier. Operating revenue for the three months ended March 31, 2010 declined 77.2% to $154 million from $674 million in the comparable period. Revenue for Q1 2010 was $533 million, versus $674 million for Q1 2009, a decline of 20.9 percent. Considering that the Executives rolled out bonuses and incentives valued around 25 million, that takes a good chunk out of the $533 million the company earned.

So an analyst from all different hedge and investment companies get on a call with the companies CEO.. not having a clue about the real inner workings of the organization. Wasn't it Warren Buffett that said don't invest in things you don't know? Hmmm.... anyway... here are the questions asked by investors: 

Question: Unidentified Participant - - Analyst: Hi. This is Brian sitting in for Ian. Good morning.

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Unidentified Participant - - Analyst: You've talked about how you're encouraged by the early indicators of your business and I was just wondering if you could go a little bit further into it. How were ad sales bookings in the first quarter compared to the fourth and how are they now compared to the first quarter?

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Unidentified Participant - - Analyst: Okay so things are getting better I guess you could say?

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Unidentified Participant - - Analyst: Okay, well that's good. What was bad debt expense in the quarter?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Unidentified Participant - - Analyst: So that appears to be proving is it trending better as we go along?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Unidentified Participant - - Analyst: Great, great and then the last question would be as far as your SuperGuarantee, is that helping you gain share yet? Is there any way -- and if it is, is there any way you could quantify it? If not, is there any anecdotal evidence that you've seen?

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Unidentified Participant - - Analyst: Great. Great. Well thank you.

Answer By: Dee Jones - SuperMedia Inc. - CFO

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Aaron Weitman - Appaloosa Management - Analyst: Hi. Could you talk about are you seeing a natural stabilization in orders that we might see in a quarter or two?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Aaron Weitman - Appaloosa Management - Analyst: Are you seeing price increases ?

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Aaron Weitman - Appaloosa Management - Analyst: Could you talk about, do you have a lot of opportunity to still cut costs and how much is left to I guess realize cost cuts quantitatively?

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Aaron Weitman - Appaloosa Management - Analyst: Okay, should we assume then that I guess the prior bankruptcy estimates don't still hold?

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Aaron Weitman - Appaloosa Management - Analyst: Just the current previous 2010 EBITDA you had?

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Aaron Weitman - Appaloosa Management - Analyst: Okay, and a last couple here. Is there still a lot of bankruptcy costs to be paid out of the current cash number and is depreciation and amortization abnormally high this quarter?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Aaron Weitman - Appaloosa Management - Analyst: Should we assume I guess on a going forward basis then for D&A that it should be closer to $100 million or closer to $200 million?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Aaron Weitman - Appaloosa Management - Analyst: Okay, thank you.

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Nilesh Desai - Carlyle Group - Analyst: Hi. Thanks for taking my question. I've just got a quick one on the SuperGuarantee. Can you tell me what sort of trend you're seeing in terms of actually paying out on claims on that? Is that a material number at the moment?

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Nilesh Desai - Carlyle Group - Analyst: Okay, thank you very much.

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Jonathan Levine - Jefferies & Company - Analyst: Yes, I was wondering if you could just comment, there had been an article in the New York Times that Verizon had requested permission so they don't have to print the directories anymore. Can you comment on that, please? Thanks.

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Jonathan Levine - Jefferies & Company - Analyst: So this won't impact the Yellow Page distribution?

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Jonathan Levine - Jefferies & Company - Analyst: And then can you give us a little sense of what the potential cost savings would be if you no longer distributed the White Pages?

Answer By: Scott Klein - SuperMedia Inc. - CEO

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Jonathan Levine - Jefferies & Company - Analyst: Okay, thank you very much.

Question: Jake Newman - CreditSights - Analyst: Hi. Could we get maybe a client count at the end of the quarter, please?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Jake Newman - CreditSights - Analyst: Okay, maybe on the ad sales decline of 20.6%, can you say anything about what contribution came from involuntary cancellations from voluntary cancellations, shrinkage by existing customers of existing programs, and maybe the offset to that, new customers or expansion?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Jake Newman - CreditSights - Analyst: And if I could one more -- on websites for what I'll call just the internet part of the business, you're not separating that, but can you talk about the trends in terms of queries year-over-year or revenue per query year-over-year?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Todd Morgan - Oppenheimer & Company - Analyst: Thank you, good morning. Selling expense in particular showed some pretty good improvement this quarter, way down versus last year and -- but actually up sequentially even though the revenues this quarter were down sequentially. I don't know if you can provide any kind of further color or granularity on some of the trends within that. For example, are the advertising expense growth that may be pushing that number up and anything else you could add. Thanks.

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Todd Morgan - Oppenheimer & Company - Analyst: Okay, and then just briefly on G&A as well, pretty good improvement in the bad debt expense category it looks like. Would it be safe to think of that category as probably likely to trend lower? It would seem to me that given the economic turmoil last year, most of the advertisers that might not be in a position to pay their bills would probably wash through. I don't know if you have any sense of that or not.

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Todd Morgan - Oppenheimer & Company - Analyst: Great. Thank you. That's helpful.

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Warren Pustam - EverKey Global Partners - Analyst: Yes, hi, good morning gentlemen. I just had a quick question on your long term debt. Is there any plans to lower the interest or refinance the debt in the next few quarters?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Warren Pustam - EverKey Global Partners - Analyst: Okay, great, and can I just get the headcount numbers at the end of the quarter? ¬2010 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Warren Pustam - EverKey Global Partners - Analyst: And just one more question. In terms of the direct mail, I know you don't break it out, but could you just give any indication if it's exceeding, meeting or below your targets?

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Warren Pustam - EverKey Global Partners - Analyst: Okay, thank you.

Question: Scott Vogel - DK Partners - Analyst: It's actually Scott Vogel. Can you just explain to us how you're accounting for the SuperGuarantee?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Scott Vogel - DK Partners - Analyst: Okay, but are you reserving for -- besides from the cost of administering it are you reserving for potential payments?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Scott Vogel - DK Partners - Analyst: Okay, thank you.

Question: Shachar Minkove - JPMorgan - Analyst: Hi, actually two questions. One is on the general and admin line, obviously the bad debt expense helped. Looks like it was down about $30 million sequentially from fourth quarter to the first quarter. At least a part of that was bad debt, but can you talk about some of the other things that went into that? And the second thing is you have a pretty big chunk of cash on the books right now. Got any thoughts on what you want to do with that?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Shachar Minkove - JPMorgan - Analyst: So I guess ex the bad debt, this is kind of a run rate level?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Shachar Minkove - JPMorgan - Analyst: Okay, and then in terms of the cash? ¬2010 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by

Answer By: Dee Jones - SuperMedia Inc. - CFO

Answer By: Scott Klein - SuperMedia Inc. - CEO

Question: Philip Grose - Castle Hill - Analyst: Hi, thanks. Could you give us any kind of quantum on how much money you received for publishing the White Pages? Does Verizon pay you a lump sum every year and do other operators pay you to publish the White Pages?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Philip Grose - Castle Hill - Analyst: So Verizon and other incumbents wouldn't have any kind of significant revenue -- be a significant revenue generator for the business for the White Pages?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Philip Grose - Castle Hill - Analyst: Is Verizon your largest client in terms of by revenues?

Answer By: Dee Jones - SuperMedia Inc. - CFO

Question: Philip Grose - Castle Hill - Analyst: Okay, thank you.

Answer By: Scott Klein - SuperMedia Inc. - CEO

 
Ok investors... is it just me or are you asking the wrong questions? Do you really think Scott Klein was going to tell you any guidance? He is refusing, much like Birkshire Hathaway and Mr. Warren Buffet himself of giving guidance. One assumes Birkshire does this to be secretive, truth is they don't want folks copying the investment decisions and thereby effecting the entry points of future investments. Scott Klein chooses to stop giving guidance because either he is being investigated for his crimes of SEC Fraud or he is nervous. I hope he is nervous. Who else takes a company that lost 15% one year and then another 21% on top of that..... and gives himself a big fat cat crony CEO bonus!?
The real questions that needed to be asked:
Is it true you are outsourcing PPC acct managment jobs to India? Did you just fire 10 out of 28 in Coppell Tx?
Is it true that Double Digit usage numbers in some markets does not constitute double digit growth in all markets? Is it true the Verizon and Idearc shifted far from rural markets to urban ones? They did not have the revenue in the smaller books, such as East Texas etc and failed to retain those loyal print spenders?
 
Is it true that employees can count on the executive team of the company to pad pockets while outsourcing jobs and creating client churn with lesser experienced and expensive employees?
Is it true that SuperPages.com is barely in the top 50 of all websites and you no longer have a Director to guide your internet department? I suggest you find someone to guide you into a service oriented (not commission sales) business model for "local holistic search engine marketing" solutions to compliment a print product that no longer needs big commissions and can be purchased online.... wasn't that the point of Menu Bundle Pricing and the fake appt setting SuperView system anyway?
Is it true you parade around sales reps who are praized for making 80 appointments in one day? I am sure this will really work well. 80 shitty pitches of shitty products that offer very little room for client services and turn advertising into that of a meat market (or slaughter house) is not something I would brag about. At least 70% of the appointments or harrassments recorded in SuperView are fake. And YOU KNOW IT!
Why won't you disclose the employee reduction measures? Word is you are firing older reps and using your henchman Jesse Vickers (a black man who is very anti-"people like me") to investigate when you see fit. Going after some folks for "earning too much" on your crooked incentive plan that seems to change more than your underwear.
I love how you spun the new white page legislation in your favor. Since you finally admitted that 1 out of 9 want a white page book and the rest see it as an invasion of privacy (considering that 22% of homes don't have a landline and the rest have VOIP/SKYPE/MAGICJACK etc) and they also don't seem to want the Yellow version either! Phone books don't work like you think. What about the bail bond company in Dallas who got calls fro 17 dollars each from AT&T Dallas and 42 dollars each from SuperMedia Verizon Dallas?
Is it true you don't disclose information on the "ServiceMagic.com Service Gaurantee" program you rolled out called the SuperGaurantee because FOLKS ARE NOT SUBSCRIBING TO THE GIMMICK, and once you read the terms and conditions on the $500.00 gaurantee, you quickly learn how much of a real "Gimmick" it is! It is not enough to make folks in urban markets use a bulky phone book over an iPhone, or Android, or iPad, or the other 2334234 devices you can use to get internet information? Better programs exist online. What about sites like Groupon? What about the failure of the SuperTradeExchange program....
You won't see Scott or Dee disclosing anything that really matters.... the meat and potatoes that tell ya if the company will be viable in urban markets again? How about wiping out credit reps to go back to previous non paying clients and get them back in the book? Do you think they will all of a sudden pay again? What Mr. Klein fails to realize is when you lose a client, it is hard to WIN them back. Many of them owe money, and when they complained about issues, your COST CENTER, errrr I mean Customer Service Department, was told not to offer an adjustment.
For years you told clients to pay more.... more books... more paper... cost of delivery gas..... CEO needs a new DONZI!  Seriously. Now it is time to lower the rates and re-align the value proposition, too bad that means losing a bit of New Issue to the Present Issue..... NI must be greater than PI... blah blah.... what company tells a client... you can't cut back or spend less.... you lost your ass if you do. Meanwhile we are going to add a double double double page ad placements in front of your 500.00 per month business card ad. I suggest taking that 500.00 per month and investing it in some content, links, and improving the conversions of your website....
Nobody uses SuperPages.com now anyway. The site is dropping like a rock. Judy's Book and Angies List are doing better! lol.
I wonder what percent of churn you have in Sales vs Acct Management/Service (outsourced to India now) vs Management vs Executive Management..... I bet you are churning 30% of sales, 60% of acct management, 4% of management, and less than 1% of your Executive Directors and Vice Presidents.
How long til you can't afford your debt payments?
All I know is.... Scott.... WE CAN COUNT ON YOU...."TO PAD YOUR POCKETS AND SINK SUPERMEDIA"....... yet you think your subjects are loyal? They are discontent. Let's see you have the audacity to do a shareholders meeting!
Wonder how long til Verizon says you can't use the name on the book.... didn't SuperMedia have its BBB.org rating revoked on the corporate level in November? Finally, you are first in class at something again!
LOL..... what a train wreck folks. Keep those emails and analyst calls coming. It is getting thick over in DFW Airport  at The Terraces Hotel/Verizon Place/Idearc Center/SuperMedia SlaveTrade Headquarters......
I love how Paulson helped you out of the bankruptcy..... they also helped you go into bankruptcy. First ones to offer 225 million... then someone offered 250 million, Paulson says ok.... let's make that 260 million. They paid $17.00 per share.. Most previous Idearc bondholders had no choice but to sell. Paulson is the dealer and playing at the table. How do you beat the house? I bet Paulson was also the hedge fund shorting Idearc stock and forcing the company into bankruptcy with no value. Naked short selling should be a crime punishable by death!
Going long on a company that posts -15% then -21%..... and publishes phone books .... that is like going long on a Tube TV Manufacturer!