Shares in Yellow Pages Publisher R.H. Donnelley Plunge 48%

Cary, N.C. — Yellow pages publisher R.H. Donnelley’s stock lost nearly half its value in a Wall Street bloodbath Thursday after the company issued a lower sales forecast for 2008.

Shares dropped 48 percent to close at $9.34 on the New York Stock Exchange.

R.H. Donnelley (NYSE: RHD) is one of the largest publicly traded companies based in North Carolina and employs more than 2,100 people.

In recent months, Donnelley shares have plummeted in value from a high of $84.49 as competition has increased for advertising dollars, especially in printed directories vs. online opportunities.

The company also announced that the head of its interactive division that is focused on Web publishing is resigning.

In announcing its quarterly earnings before the markets opened Thursday, Donnelley also said it would not pay a dividend.

The revenue forecast for 2008 was reduced to between $2.6 billion and $2.7 billion from a December forecast of $2.75 billion.

Donnelley’s fourth quarter revenues increased 10 percent to $680.8 million. It reported a loss of $12.1 million vs. a $50.8 million loss for the same quarter in 2006.

The company reported a profitable year with net earnings of $46.9 million or 65 cents per share. In 2006, the firm reported a $208.5 million loss.

“We made significant progress addressing our strategic priorities in 2007," said David Swanson, chairman and chief executive officer of the company, in a statement. "We aggressively invested in key areas to improve our value proposition both to consumers and advertisers. We extended the Dex market brand across our footprint and now present a single identity in the markets we serve. In addition, we significantly advanced both our diversification in terms of online sales through our Triple Play solutions and the Business.com ad network, as well as our technology capabilities through the acquired Business.com team. These initiatives will help us to maintain our market leadership position in local search.”

However, Jake Winebaum, the president of the interactive group, is leaving to spend more time with his family, the company said. Winebaum was the founder and chief executive officer of Business.com when Donnelley bought the company last July for $345 million in cash.

Brian Barnum, the chief operating and finance officer of the interactive group, will replace Winebaum on an interim basis.

However, in looking forward to 2008, Swanson was not as positive.
"Though we are pleased with our 2007 accomplishments, weaker economic conditions than originally anticipated have created a more difficult selling environment,” he said. “As a result, we have lowered our outlook for 2008. Furthermore, given the recent decline in the share price and the near-term economic outlook, we have decided not to initiate a dividend in order to apply all cash flow towards debt repayment. I am confident that we remain well positioned for growth once we move past the current cyclical challenges."