For years, satirical late-night-TV host Stephen Colbert has been running a series on his show called "Better Know a District," which highlights one of the 435 U.S. congressional districts and its representative. While I am no Stephen Colbert, I am brutally inquisitive when it comes to the 5,000-plus listed companies on the U.S. stock exchanges.

That's why I've made it a weekly tradition to examine one seldom-followed company within the Motley Fool CAPS database and make a CAPScall of outperform or underperform on that company.

For this week's round of what I like to call "Better Know a Stock," I'd like to take a closer look at Dex One (Nasdaq: DEXO).

What Dex One does
Probably best known for the business print directories that litter your doorstep every three months, Dex One, through a combination of print, online, and mobile pathways, helps businesses reach their target audience through advertising.

In Dex One's most recent quarterly report, the company reported a 12% decrease in ad sales, which is an improvement over recent quarters, and a profit of $1.05 per share, which compares to an impairment-filled year-ago quarter that witnessed the company losing more than $12 per share. Dex One's biggest boost came from digital bookings, which rose by 53% over the previous year.

Whom it competes against
As an advertising company, Dex One has no shortage of competitors. It is clamoring for clicks right alongside online advertising king Google (Nasdaq: GOOG), which owns about 44% of all online advertising, as well as mobile advertising specialists like Velti (Nasdaq: VELT), which, as I highlighted last month, grew by a robust 75% in its most recent quarter.

With ad sales moving in droves away from print and toward social media and mobile applications, previously print-heavy publishers like Dex One and The New York Times (NYSE: NYT) have been left holding their buggy whips. The New York Times has had no choice but to make the transition toward digital content, with Dex One going the route of keeping its friends close and its enemies closer.

Dex One announced in August that it would be merging with SuperMedia (Nasdaq: SPMD), another struggling yellow-pages ad-print company, and previously one of its largest competitors. According to Dex One, the merger will create annual synergies of $150 million to $175 million by 2015 and should put the company in a better position to retire some of its debt.

The call
After carefully reviewing the prospects for Dex One, I've decided to make a CAPScall of underperform on the company.

In algebra we're taught that two negatives cancel out to make a positive. In business, it doesn't work that way. Usually combining two really bad companies just makes for an even larger really bad company. I will give Dex One some credit for making the move to digital bookings, as that's its only chance of surviving, but even now I feel that Dex and SuperMedia are far too late to the party to make much of a difference. Even 10 years ago these names were the go-to when it came to getting your name out to the public, but I'm afraid now they're as archaic as the buggy whip. Dex One has only been profitable in three of the past 10 years while SuperMedia has seen its ad sales halved since 2007. Unless there's a special on magic wands in the yellow pages, I don't see things getting any easier for Dex One shareholders anytime soon.

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