Verizon Spinoff Idearc Worth a Look -- Barron's

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Vital Signs by Kopin Tan

Highlighted companies: Idearc Inc. (IAR), Verizon Communications Inc. (VZ), RH Donnelley Corp. (RHD), Yahoo! Inc. (YHOO), Google Inc. (GOOG)
Summary: On Friday Verizon Communications Inc. (VZ) spun-off its yellow pages business, called Idearc (IAR), as a dividend to shareholders; IAR shares begin trading on Monday. Directories are often seen as sedate businesses, and under Verizon revenues were declining. Of particular interest, though, its IAR's online directory, SuperPages.com, which had revenues of $200m last year and holds the promise of faster growth; rival RH Donnelley Corp. (RHD) is expanding its online presence. While capturing the online market could mean rate-cuts in the short term, yellow pages' stronghold on local listings give it a stable foundation for expansion. And directory units have been in the radar of LBO firms since 2004 for their stable, growing cash flows. Shares were trading last week at $26.60 on a when-issued basis, but analysts feel they could be worth up to $33, and even $39 in a buyout."When a corporate parent casts off a vexing unit with unpromising growth, the natural inclination is to steer clear of this forsaken offspring. But the yellow pages business Verizon Communications is spinning off may merit a second glance."
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