The process of trying to reinvent yourself to remain relevant can be a painful procedure for any company and Dex One Corporation (NYSE: DEXO) is a prime example. Just ten months ago shares were trading as high as 9.42, of course that was before the bottom fell out and shares spiraled south, eventually leading to notification letter from the NYSE stating the company was in violation of a listing standard that requires the average closing price of a company’s common stock over a consecutive 30 trading-day period to equal or exceed $1.00 per share.
While delisting may not be in the future for DEXO, thanks in large part to a favorable third quarter report delivered on Thursday, the road back to the glory days certainly appears to be littered with obstacles.
Few industries have changed so dramatically as Publishing and while DEXO has tried to evolve with the times, focusing their efforts on Interactive Marketing, the transformation has been slow. When DEXO announced their third quarter 2011 results on Thursday company CEO Alfred T. Mockett stated “We continue to deliver on our strategic plan and position Dex One to be the one partner local business needs to successfully navigate the complicated and rapidly changing marketing landscape” yet it remains to be seen if DEXO can “successfully navigate” that landscape themselves.
Mockett insisted that the company was “working diligently to transform our business to have the best people selling a broad portfolio of marketing services through simple and effective packages” and while they have seen growth in their digital and bundled packages DEXO is still facing a mountain of total debt in the neighborhood of $2.3 billion.
While the total debt is intimidating, the real fear may exist in trying to figure out how DEXO is going to become the preferred choice of businesses as it relates to marketing. Without question companies will continue to seek the assistance of marketing solutions companies but there are also a number of companies who are turning in-house for their advertising and marketing needs.
There was a time when companies needed the services of a company like DEXO, getting their name in the yellow pages print directories, core directories and community directories was a must if they were to attract new customers. Obviously those days are gone as most people have turned to the Internet to gather information about services in their area and the Internet offers a number of marketing tools that any company can employ to broaden their appeal.
Sure it may help that DEXO can offer solutions “to promote businesses on the Internet, such as assessment of marketing programs and advertisements, message and image creation, recommendations for advertising placement, industry-specific research and information, market-specific research and information, in-depth understanding of how consumers search for businesses and what influences them to buy from one business versus another” but much of that information is readily available through a search on a search engine.
As for gaining more exposure on the Internet many companies employ a search engine marketing staff that fully understands the value of search engine optimization, keywords, social and business networking, keyword advertising, etc. With budgets already stretched thin it is more likely that these companies will continue to grow their Internet presence organically rather than turn to outside companies like Dex One.
Third quarter growth for DEXO can be viewed in a number of ways for investors and while it’s hard to knock growth it’s just as important to determine if that growth is sustainable. Mockett stated “We marginally exceeded third quarter ad sales guidance despite both the secular pressure on our print products and difficult local business conditions. We are making steady progress towards our goal of returning to growth, albeit more slowly than we originally expected.” Unfortunately there is nothing to indicate that their print products will return to prominence and as companies continue to adopt their own marketing strategies during the “difficult local business conditions” they will be less likely use the services of a company like DEXO when conditions improve.
