It's not every day that you find a public corporation with an apparent 31% dividend yield. But a confluence of events has led to just that -- a stock that can be bought for $8.35 per share and is currently paying out $0.65 a quarter.

Mobile messaging and communications services company USA Mobility (NASDAQ:USMO) was formed when paging rivals Arch and Metrocall merged late in 2004, following stints in the bankruptcy bin for both companies. Today, USA Mobility is busy shoring up its dying business, squeezing as much cash as it can from operations while it looks for new growth.

But even the millions the company is returning to shareholders in dividends took a back seat to the deteriorating fundamentals in the fourth-quarter earnings it reported yesterday. USA Mobility shareholders already assume that revenue will continue to decline as customers dump pagers in favor of wireless solutions from the likes of Verizon Wireless – a joint venture between Verizon Communications (NYSE:VZ) and Vodafone (NYSE:VOD) -- and AT&T (NYSE:T). But lower margins in the final quarter and tepid forward guidance spooked investors, and the stock dropped more than 20% in a single day.

For all of 2007, USA Mobility reported revenue of $424.6 million, compared to $497.7 million in 2006. In the fourth quarter, the company rang up a big net loss of $46.7 million, thanks to a $54.3 million tax ding related to an adjustment of the value of deferred income tax assets.

To help turn around the eroding revenue picture, USA Mobility resells Sprint Nextel (NYSE:S) services with its products. It even recently announced a paging device that works with Research In Motion (NASDAQ:RIMM) BlackBerries to offer users enhanced messaging capabilities. But the company provided an outlook that included an even faster decline in revenue for 2008, indicating that none of these offerings were strong enough to move the needle in a positive direction.

So while that 31% dividend yield sounds tempting, huge risks come with it. Management is resoundingly clear that it may alter the dividend in the future, and in my view the stock will likely continue its fall as the ability to generate new flow declines. Taken together, I still consider USA Mobility a bad call unless signs of a true turnaround emerge.

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