Yesterday’s trading: Yell may be next to shout for help
Directories giant could be the next to ask investors for a bail-out as the advertising market goes from bad to worse.
The Himalayan debt mountain built up by the Yellow Pages owner took centre stage after newspaper group shocked investors with a 212m cash call.
An alarming slide in the adverting market since the end of February forced the hand of the owner of the Scotsman and Yorkshire Post owner.
But experts say that if Johnston Press has caught a cold, Yell could soon come down with the flu.
The talk is that Yell’s full-year results next Tuesday could contain more than just another dose of dire trading news.
And if the ad market gets any worse Yell may be forced to raise some fresh cash of its own, according to industry sources.
The parallels between the Yell and Johnston Press are striking.
Both are heavily dependent on small businesses, which are slashing advertising spending as the economy grinds to a halt.
Property and used car ads have plunged by over 10pc since the start of the year, said Johnston Press, which can only spell bad news for the listings in the Yellow Pages.
Both groups are also heavily indebted as a result of acquisitions sprees.
Yell’s debts now stand at 3.7bn after building up a directories empire in the US and Spain in 2005 and 2006. Not long after the firm arrived, the property markets in the US and Spain started to crash, dragging the economies down with them.
Yell shares plunged 14p to 188p, and have now lost 70% of their value since a calamitous profits warning this time last year. Johnston Press crashed 20p to 115p, while fell 13p to 249p and ‘A’ shares lost 19p to 421p.
The FTSE 100 finished up becalmed at 6,216, gaining just 4 points on the day after another feeding frenzy in the mining sector offset steep losses in the media and banking sectors.
Wall Street opened over 100 points higher on the back of some relatively benign inflation figures, suggesting there is scope for then US Federal Reserve to cut interest rates again. But the prospects for further rate cuts this side of the pond were dealt a heavy blow by the Bank of England’s doom-laden inflation report.
In the rampant mining sector, rallied 98p or 4.9% to 2118p on revived talk that Chinese aluminium giant Chinalco is quietly building up a 10% stake. BHP bid target rose 238p to 6881p.
Drugs giant gained 39p to 2130p after the American authorities sanctioned the use of its schizophrenia pill Seroquel for treating bi-polar disorder.
It was a sea of red in financials following a U-turn of staggering proportions from (down 14p to 144p) over a 300m cash call. in the growing queue for a bailout could be , which dropped 13p to 445p. Citigroup slapped a ’sell’ rating on A&L, arguing that a ‘marked deterioration’ in its loan book will tear apart its already fragile balance sheet.
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dropped 14p to 470p amid concerns it might struggle to drum up interest in its own given the growing list of companies asking for a handout. IT services firm fired up dealing screens following a robust first-quarter trading update. New boss Andy Green reckons the tech firm has remained resilient in the face of an economic slowdown despite ‘a few examples’ of slower spending.
Price comparison website .com climbed 3p to 118p after blue-blooded broker Cazenove gave it a prominent position on its ‘ outperform’ rankings.
Vaccine developer held out some hope for hay fever sufferers. Its shares blew 6p higher to 34p after trumpeting stellar trial results for a vaccine it claims will wipe out the summer snuffles.
Mining minnow gushed up 1p to 14p after confirming that a number of oil majors want in on a test field in Colombia.
Biofuel producer rose 8p to 553p after doubling first-quarter profits on the back of soaring energy costs.
Other stories:
Market report: Wednesday close
City news in brief: E.ON, SCS, Freddie Mac
Fund managers turn negative on UK shares
Shock as Johnston seeks 212m funds lift
B&B under fire over quest for 300m
Cayzers to reap riches on TGE
Newspaper and magazine share tips
O2 dodges crunch with strong results
Sainsbury staff share 47m as profits soar
4000 JPMorgan jobs face the axe