R.H. Donnelley to Cut Publishing Jobs as Ads Decline

R.H. Donnelley Corp., the U.S. publisher of phone directories, said it plans to cut some jobs and increase revenue from online services to help weather a slump in advertising sales.

``When you hit an economic down-cycle like this, you need to hunker down,'' Chief Executive Officer David Swanson said in an interview yesterday. ``There will be some headcount reductions in some of the manufacturing parts of the business.''

R.H. Donnelley has plummeted 71 percent in New York Stock Exchange trading since Feb. 28, when the company scrapped plans for a dividend and cut its 2008 earnings forecast. Swanson is reducing costs and relying on a unit that helps small businesses place advertisements on search engines to fuel growth in large cities, where the company makes 22 percent of its sales.

``We can change the drag that they've caused on our growth rates and turn that around as we roll out these more advanced Internet products,'' Swanson said.

Spokesman Tyler Gronbach declined to specify how many jobs may be cut at the company, which has 4,700 employees. He said manufacturing includes the design and layout of products. The company doesn't handle its own printing.

R.H. Donnelley, based in Cary, North Carolina, closed unchanged at $5.14 at 4:15 p.m. in New York Stock Exchange composite trading. The stock has plunged 86 percent this year. Idearc Inc., another publisher, had slumped 74 percent.

Debt Load

R.H. Donnelley's stock is under pressure because of its $10 billion debt, Mark Bacurin, an analyst at Robert W. Baird & Co., said in a phone interview yesterday.

``This is not the market environment to have a highly levered position,'' said Bacurin, who rates the stock ``outperform'' and doesn't own any shares.

Net debt will fall to $9.5 billion to $9.6 billion at the end of the year, R.H. Donnelley said Feb. 28. The debt of $10 billion as of Dec. 31 was little changed from a year earlier. Ad sales will decline this year, R.H. Donnelley also said then.

Swanson said in yesterday's interview that R.H. Donnelley has ``very stable cash flows.''

The company paid $4.2 billion for Dex Media Inc. in 2006 to expand in more U.S. states and agreed to buy Business.com for $342 million last year to add online services.

To contact the reporter on this story: Wayne Ma in New York at wma14@bloomberg.net.

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net.

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