LivingSocial, in a battle with Groupon and other deal providers to gain (and keep) market share, lost an eye popping $558 million beyond its $245 million in net earnings, according to a regulatory filing by Amazon.com, which owns 31 percent of the company. The filing was written about in today’s Washington Post.

The Post article notes that LivingSocial has 4,900 employees and claims more than 60 million members worldwide in 647 markets across 25 countries. Its vouchers grossed $750 million.

Here are the accounting details. Its vouchers grossed $750 million, giving LivingSocial net earnings of $245 million. It had operating expenses of $686 million. It also had other expenses associated with various acquisitions and stock compensation of $117 million, resulting in the $558 million loss.

In our view, companies such as LivingSocial (and Zynga and Groupon et al) aren’t really tied to earning immediate profits. The gamble is whether their massive spending leads to building a solid foundation for growth — and profits — going forward.

The European directory and local search operator Truvo has taken major steps toward consolidating around its flagship Belgian operation. On Dec. 22, Truvo “divested” its operation in Ireland, selling it to Contact Holdings, which operates Yellow Pages companies in the Baltic States. Terms of the transaction were not disclosed.

Truvo has also dramatically curtailed its senior management team, eliminating five positions, many held by longtime Truvo executives. The departed include CFO Marc Goegebuer, MD Belgium Martine Bayen, VP HR Peter Vandenheulen, VP Marketing Jose Lema and VP Operations Ramon Ferrer. CEO Donat Rétif will assume the role of MD Belgium while the other positions will be eliminated or absorbed by remaining staff, according to an announcement sent to investors on Dec. 23. The combination of selling Ireland and eliminating senior positions will save Truvo 6 million euros in costs, according to the statement.

Jon Martinsen is CEO of Contact Holding. He and Truvo CEO Donat Retif worked together at Herold Business Data in Austria when it was owned by GTE (later to become SuperMedia). Herold is now a unit of European Directories. Contact Holdings is apparently the new name for Interinfo Holdings, which operates directory companies in Estonia, Latvia and Lithuania. Interinfo is owned by the private-equity firm Balt Cap.

Truvo’s Irish operation, which uses the brand Golden Pages, was battered by a combination of a brutal Irish economy and a heavy exposure to one large metro market, Dublin. The last full-year figures for Truvo Ireland were in 2009, before a recapitalization removed Truvo’s obligation to report its results publicly. Truvo Ireland finished 2009 with revenues of 54 million euros, a 26 percent decline from the year before. Assuming similar declines over the past two years, the business would end this year in the 34 million euro range. David McGuffy was MD of Truvo Ireland. It is unclear if he will remain with the unit under its new ownership.

Truvo (then World Directories) was initially a minority owner of the Irish directory operation. It acquired the remaining 63 percent of the Irish business from Eircom back in 2002 for US$186 million (at the 2002 exchange rate), which was roughly an 11X multiple on EBITDA.

Rétif makes clear in the statement that Truvo sees its future tied largely to the fortunes of its Belgian operation. The fate of Portugal, Truvo’s remaining non-Belgian operation, is uncertain, but it’s logical to assume Truvo may be seeking a buyer. Truvo is also a minority owner of Trudon, the South African directory and local search provider.

Yelp’s S-1, which was issued last week as a run-up to a $100 million IPO, reveals a lot of new data about the reviews leader. The big question about Yelp has been whether it can grow against increased pressure from Google, and also begin to take market share away from traditional media players such as Yellow Pages.

Yelp’s plan for growth relies heavily on overseas growth. It is now in 22 international cities on top of 43 domestic markets. But it would also grow its primary business via local and brand advertising, monetizing mobile services that now make up 40 percent of its searches, boosting revenues from deals (where it has lowered expectations), and more revenue sharing dollars from restaurant reservations and travel.

Launched in 2004, Yelp had initially risen to the top of the heap among service and city guide leaders by dominating Google’s organic local search. After Google’s effort to acquire Yelp for $500 million ended under murky circumstances, Yelp has seen its prior dominance of Google search fade away. Moreover, Google Places — enhanced by Google’s purchase of Zagat — now looms as a competitor in its own right for reviews and advertising.

“Our success depends on our ability to maintain a prominent presence in search results for queries regarding local businesses on Google,” notes the S-1.

Yet, Yelp is growing splendidly, even with the apparent Google woes. Yelp earned $47.7 million in 2010 and $58.4 million in net revenues in the first nine months of 2011, representing 80 percent growth over the first nine months of 2010.

During the first nine months of 2011, the company claimed 19,000 paid accounts — up 75 percent from the same period in 2010, and 529,000 claimed pages, up 114 percent. And in a business where the number of current reviews is its currency, it has an archive of 22 million reviews, up 66 percent from the same period in 2010. Overall, it sees 61 million monthly users.

Yelp is primarily known for its restaurant reviews. That is still its primary image, and what has made “to yelp” a verb. But Yelp is also more diversified than generally perceived, and resembles a combination city magazine/Yellow Pages.

Restaurants and dining now make up 23 percent. Other major segments include shopping (22 percent), services (10 percent), beauty (9 percent), arts and entertainment (8 percent), health (5 percent), nightlife (4 percent), and travel and hotel (4 percent). It also has a broad demographic, with 42 percent between the ages of 18 and 34, and 33 percent between the ages of 35 and 49.

What investors will be looking at is not only Yelp’s ability to grow and move into new areas, but also its potential for profits. The company has accumulated a deficit of $32.1 million since its launch, and lost roughly $7.6 million in the first nine months of 2011. Sales and marketing costs have been especially heavy, eating up $38.5 million for the first nine months of 2011.

Business Insider suggests that “Yelp is Groupon without the cash flow,” basing its comment on Yelp’s increasing marketing costs for customer acquisitions. But to us, Yelp is working to get over a tipping point. And unlike Groupon’s one-time relationship with local businesses, Yelp is working on Yellow Pages-like renewal rates.

In fact, the key to Yelp is to continue its ability to maintain and leverage its huge user base, satisfy advertisers, and stay abreast of social media trends that help match users with establishments based on their interests. It won’t be easy and is not a sure thing. But Yelp’s trajectory to date has been an impressive one.

Shares of Yelp Searches

Last week several of the leading listed directory companies saw sizable spikes in their stock prices following their Q3 earnings announcements, though the surge seems to have died off today.

For example, Dex One announced its earnings on Nov. 3. On the call, CEO Alfred Mockett revealed that Dex will not achieve its previously stated goal of returning to growth and reaching 30 percent of revenues from digital in 2012. Yet the company’s share price doubled on Nov. 3 to 1.29 per share, up from the previous day’s close of 0.64.

SuperMedia also got a boost that day, though a less dramatic one. Its share price rose to 2.47 from 1.85 at the Nov. 2 close. Also Canada’s Yellow Media, which has experienced a dramatic fall in its share price in recent weeks, got a nice bump last week after its earnings announcement, also on Nov. 3.

So why the gains? It may be that there is increasing confidence that publishers have a chance to turn the corner with new digital products. Even though Dex announced it would not meet targets it made quite a big deal of at its February investor day meeting in New York, it did make a case that it is making real progress on the digital side of its business. The company announced on the call that digital revenues grew by 15 percent in Q3 and now represent 16 percent of revenues. Dex noted its SEM business in particular has hit its stride and grew by 30 percent.

It appears to be just a coincidence that all three companies are also at times mentioned in ongoing speculation about consolidation of the North American directory industry. At BIA/Kelsey’s recent DMS ’11 event in Denver, Joe Walsh, then the CEO of Yellowbook, said quite directly that consolidation will and should occur within the next one to two years. It’s important to note that Walsh mentioned no company by name in his remarks.

Groupon’s greatly reduced IPO is apparently set to take place on Friday, Nov. 4, in an environment much less friendly than originally envisioned last spring.

The bloom has come off for a number of reasons. Groupon has almost no barriers to entry and has had to contend with dozens and dozens of copy cats — apparently 600 at the peak. The glut of services has led to consumer and merchant overload (including lower commissions in some cases), and perhaps fatigue.

The result is that “the fastest growing company ever” appears to have slowed down and perhaps even declined in its core daily deals business, per Yipit Data.

Groupon’s evident slowdown may have helped the company run through two short-lived COOs — a very unusual situation prior to an IPO. The unorthodox distribution of its last round of funding to its initial investors also appeared to signal an internal lack of confidence in the company, greed or both.

The same could be said for the unusual accounting method in the initial S-1 leading to the IPO, which sought to downplay the company’s marketing costs in the U.S. and especially abroad. These have, in part, caused the company to be heavily in the red.

At the same time, new tools and platform products that would extend Groupon’s relationships with SMBs, specifically GrouponNow instant deals, which are mobile-oriented, have had slow ramp-ups. They’ve only had a nominal impact on the bottom line.

Again, per Yipit Data, Groupon Now resulted in less than $1 million in net revenues from May to September — although results will be bolstered now that the product is offered in 25 markets and achieves greater penetration. Other new products such as Groupon Goods, Groupon Live and Groupon Getaways have had promising results, but are not yet strong enough to bet the company’s future.

Groupon’s troubles have not been suffered in isolation. They’ve had a trickle down effect on other deals companies. Most notably, BuyWithMe, the No. 3 or No. 4 player in the space, was unable to raise money in the wake of Groupon’s problems, and has apparently been forced to sell at a fire sale price to Gilt Groupe, which may now grab its technology, lists and some of its sales force — even though GiltCity currently operates as a slightly different “flash sales” site. Groupon’s problems have also apparently caused LivingSocial, the No. 2 player, to put off its own IPO plans.

Is it all bad for Groupon and the deals space? Of course not. Groupon continues to have a basically sound business. In the last quarter, it cut off most of its marketing dollars with little apparent impact on its business. This is what we’d expect. Groupon is not a new movie, and it doesn’t need to be constantly marketed.

Groupon also continues to leads the deals segment in virtually every market it is in. Its product lineup is increasingly promising too. At the same time, we see validation in the model by the major investments in the deals space being made by Google, AT&T and Amazon (but not Facebook or Yelp).

In our view, the big money may have been nice for the early investors — although they found their own path to getting paid back. Strategically, the $25 billion valuation was largely a yoke around Groupon’s neck. At a sharply reduced valuation of perhaps $12 billion — still twice the $6 billion offered by Google last winter — the company will now have a chance to grow its set of tools and platforms more organically…and, to a certain extent, in its own sweet time.

TargusInfo, a major direct marketing tools provider and the parent company of Localeze, a “Big 3″ provider of business listings, will be acquired by NeuStar for $650 million in cash. The deal enhances NeuStar’s positioning as a leader in authentication services across the Internet and voice networks, whether fixed-line, cable or mobile. Authentication is expected to dramatically grow with the boom in digital services such as movie downloads. Both companies are based in Northern Virginia.

Localeze’s listings business is not the biggest factor in the acquisition, but the division’s focus on enhanced SMB and franchise profiles will likely fit into the mix. TargusInfo is perhaps best known in the direct marketing world for its lead gen scoring techniques, which evaluate the likelihood that a lead will turn into a sale. TargusInfo is also well known for its Caller ID verification service, among other real time, on demand information and analytics services. It helps process more than 100 billion annual transactions around the world.

TargusInfo posted $149 million in revenues for the year ended Sept. 30. Combined, the two companies earned $732 million.

“The people who know both of us understand that billions of times every day Neustar and TARGUSinfo flawlessly help people find each other, connect to one another and share.,” notes Neustar CEO Lisa Hook in a blog post. “By combining TARGUSinfo’s leadership in Caller ID and online information services, such as lead verification and scoring, with Neustar’s strengths in network information services, including address inventory management, network security, and marketing analytics, we will be able to greatly extend Neustar’s ability to provide its customers services based on unique, non-replicable datasets.”

Localeze President Jeff Beard told us that “at the end of the day, it is all about providing real-time intelligence about identity. The vast majority of that is consumer identity,” he says. Beard adds that Neustar’s interest in TargusInfo is on several levels, including local search. Major tech companies such as IBM, Intel and others are all getting more involved in local search as part of their broader activity, he notes.

Yell Group announced its full-year 2011 results this week (its year ends March 31), with digital media revenues growing by 9.4 percent from last year. CEO Mike Pocock projected during the full-year earnings call that by 2015, 75 percent of Yell’s products will be digital, with the remaining 25 percent in print. However, Pocock emphasized that print is still “very, very important” to Yell.

For the full year, Yell’s print revenues declined by 17.1 percent in the U.S. and 23.5 percent in the U.K. Digital revenues accounted for 24.3 percent of total revenues in FY2011. Getting to 75 percent digital by 2015 will require aggressive growth in new products, even if print continues to decline at a brisk pace.

“We’re going to continue to invest in it,” Pocock said. In secondary markets, which include rural areas and smaller cities, print remains the primary source for local advertising and lead generation.

In addition, Yell plans to roll out new business initiatives in July, which focus on three areas of strategy: mobility, social and e-commerce. Another goal is to increase the quantity and quality of its product offerings. Pocock said the company wants to “sell more products at one time and frequently” as opposed to selling a series of products only once or twice a year.

This notion of moving from a canvass based to a continuous contact sales model is something we expect to see more and more as publishers add new products that are increasingly removed from the annual media sale paradigm.

2010 was a dismal year for the New Zealand branch of Deutsche Bank after exposure to the Yellow Pages Group restructuring. The KPMG Financial Institutions Performance Survey issued last week shows that Deutsche ranked at the bottom out of 10 New Zealand branch banks on key measures, including a $53 million loss for the financial year, a 162 percent fall from the previous year’s profit and a negative 37 percent return on equity.

Local Chief Executive Brett Shepheard declined to comment on the deterioration specifically, but in a written statement to www.stuff.co.nz said that “the 2010 result was effected by a loan loss provision from a legacy leverage loan portfolio.”

Last December 40 banks holding Yellow Pages Group’s debt were expected to vote on a restructure of YPG’s reported debt mountain of 1.4 billion for the June 2010 financial year. The banks loaned nearly $1.5 billion to Unitas Capital, a Hong Kong-based private equity group, and a Canadian teachers pension fund to help fund the $2.24 billion purchase of Yellow Pages from Telecom in 2007. The debt restructure came after the banks decided against selling Yellow Pages through a sales process run by Goldman Sachs last year, which would have attracted interest from potential buyers ranging from $400 million to $600 million.

The FIPS report also stated that total equity had increased across New Zealand’s banking sector in 2010, “with the exception of Deutsche Bank.”

First-quarter 2011 earnings reports are trickling in across the global Yellow Pages industry, and while the results are still largely negative, there are some signs that the rate of revenue decline is leveling off. This is consistent with what BIA/Kelsey has forecast for the Yellow Pages industry — a leveling off of print declines leading to a return to very modest growth by 2013.

SuperMedia, for example, reported that its advertising sales for the first quarter were down 17.8 percent this year, compared with a 20.4 percent drop in Q1 last year. Operating revenues were also down 17.8 percent, compared with 20.9 percent in Q1 last year. These are not monumental improvements, but they suggest some progress in stemming the flow of red ink.

At Dex One, ad sales declined roughly 17 percent vs. 19 percent a year ago. CFO Steve Blondy noted that were it not for the impact of TMP’s failure to pay money owed the publisher (TMP is currently winding down its operations) the ad sales decline would have been 14.7 percent, a more substantial improvement over Q1 2010.

Similarly, SuperMedia’s CFO Samuel Jones said factoring out the TMP impact would have given the company a Q1 ad sales decline of 15.9 percent, which amounts to a 450 bps improvement over Q1 2010.

AT&T’s results were essentially the same, down 16.6 percent in Q1 vs. 16.7 percent a year earlier. However, online growth continued to slow down, to a 6.8 percent increase vs. 12.9 percent last year. This suggests the rate of decline in print has settled a bit, otherwise the overall revenue decline would have accelerated.

AT&T has been arguably the most aggressive U.S. publisher online, and has recently added a number of new digital products, including reputation management and, most recently, deals. The slowdown in digital growth is likely a combination of the economy and the law of large numbers, since AT&T has roughly a billion in digital revenues. However, the slowdown might also suggest that IYP is maturing and new products are taking on greater importance as sources of new growth.

Across the pond in France, PagesJaunes reports its group revenues declined by just 1 percent for the first quarter, while its print decline was 7.5 percent, an improvement over a 10.2 percent drop in Q1 2010.

Collectively, these results seem to point to stabilization, defined as a leveling off of the rate of decline. This is probably the result of improving economic conditions, which includes steady improvement in bad debt ratios. This is consistent with the view that the decline in print revenues was the result of a combination of economic and transformational factors. The degee to which growth rates improve this year may be a pretty good indication of which portion of the recent declines have been cyclical vs. secular.  

None of these Q1 numbers is going to lead to any champagne being uncorked, but they do suggest that after a couple of very rough years, the worst may be over, at least for now.

Following a discussion of its 2010 full-year results, Dex One’s leadership team outlined a new strategy today that it says will restore the company to positive revenue growth by the second half of 2012, with print stabilizing to single-digit declines.

One of the key elements will be the Dex Guaranteed Actions, a performance-based model tested beginning last year in Phoenix and recently launched in Seattle and Minneapolis, with a gradual rollout in other markets. The program essentially guarantees advertisers a predetermined number of business leads.

Dex leaders say the program succeeded in changing the sales conversation from price to performance, and is seen as a key element in the company’s efforts to stability print revenue declines from their current high double digits to mid-single digits within two years.

CEO Alfred Mockett and his team outlined a number of key objectives and supporting initiatives, among them:

* The company projects it will move from 10 percent digital to 30 percent digital revenues by 2012.

* DexOne is planning to convert its 2.2 million free business listings into paid. Mockett describes free listings as an “historical anachronism.” Converting to paid will generate revenues and also direct more leads to paid advertisers, Mockett said.

* The company is investing in its sales force, arming it with iPads and launching the Dex One Sales Academy to improve both initial and ongoing sales training.

* The company is investing in its product. It will soon kick off an advertising campaign aimed at consumers urging them to “Dex it” whenever they need a local business.