Monday, December 05, 2005

Mon - Verizon to sell directories business

Verizon Communications is considering whether to sell or spin off its directory business so it can concentrate more on providing wireless, data and fixed-line services.

Based on similar sales in the past, the Verizon division could sell for $17 billion, or 10 times its 2004 profit before taxes of $1.7 billion. Qwest Communications, the smallest of the four big Bell operating companies, sold its directories business for $7 billion in August 2002.

This seems to make a lot of sense. The directories business is getting more competitive and complicated as specialist directory firms such as Yell vie for market share with the internet companies such as Google, Yahoo and Microsoft. Online is clearly the future.

It will be very revealing to see who buys them. Could it be Google? This looks like the kind of transformative and yet safe deal that might be worth their attention. Verizon is smart getting out now while valuations are high.

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