Yellow Pages Power!

Posted by Steve Yankee on October 27th, 2007 in Yellow Pages News

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From the Raleigh, NC News & Observer: R.H. Donnelley said it would start paying a dividend next year — a move investors have been clamoring for — but the announcement was overshadowed by disappointing third-quarter advertising sales for its yellow pages business. Donnelley shares fell 12 percent Tuesday after the Cary-based company reported a 2.2 percent decline in yellow pages advertising sales. Shares of Donnelley, the nation’s third-largest yellow pages publisher, are down 15 percent so far this year.

“There continue to be challenges with this business,” said Signal Hill analyst Maurice McKenzie. “My sense is that trumped the dividend.”

Ad sales were dragged down by the Florida and Nevada markets, which are suffering acutely from the housing slump. Ad sales in those two states were down 7 percent, CEO David Swanson said during a conference call with analysts. Sales in the other 26 states where the company publishes directories fell “just over a percent.” Donnelley’s revenue in the third quarter totaled $669.9 million, up only slightly from a year ago. Cash flow from operations totaled $156 million, down from $161.9 million a year ago. Donnelley reaffirmed its guidance for the year. That includes a projection that ad sales will range between flat and 1 percent growth.

“We remain optimistic that the yellow pages business is a valuable, long-term business,” McKenzie said. “We are encouraged by the actions the company has taken, over the past year or so, in terms of strengthening its position online, which we see as a critical growth engine going forward.”