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R.H. Donnelley Rises as Profit, Sales Top Estimates

R.H. Donnelley Corp., publisher of the Yellow Pages phone directories, jumped 29 percent, matching its biggest gain since at least 1980, after first-quarter results exceeded analysts' estimates.

The shares have risen 69 percent since May 6, when rival Yellow Pages publisher Idearc Inc. reported better-than-expected first-quarter profit.

Excluding a $2.5 billion impairment charge, R.H. Donnelley's earnings of 22 cents a share beat the 17-cent average of four analysts' estimates compiled by Bloomberg. The net loss of $1.62 billion, or $23.60 a share, compared with a profit of $16 million, or 22 cents, a year earlier, Cary, North Carolina-based Donnelley said today in a statement.

Sales rose 2 percent to $674.7 million, exceeding the $672.3 million average of three estimates. Ad sales fell 4.8 percent to $717.6 million, assuming the company had owned its Business.com unit a year earlier. In February, Donnelley said 2008 earnings before interest, taxes, depreciation and amortization, or Ebitda, would be as little as $1.35 billion, down from as much as $1.44 billion forecast in December.

``Ad sales, a leading indicator of revenues, reflected weak economic conditions in our markets as we expected,'' Chief Executive Officer David Swanson said in the statement. ``We are aggressively managing costs in response to this operating environment.''

Refinancing

R.H. Donnelley rose $1.82 to $8.20 at 4:15 p.m. in New York Stock Exchange composite trading. The shares also gained 29 percent on May 6. Both days marked the biggest advances since at least July 1980. The stock has lost 78 percent this year. Idearc fell 34 cents to $4.71 after a 46 percent jump two days ago.

R.H. Donnelley also announced plans to buy back debt. The company will repurchase bonds at a discount through an exchange that will lengthen maturities and include less-restrictive covenants, Goldman Sachs Group Inc. analyst Peter Salkowski said today in a note. The offer will end on June 6.

The company's 8.875 percent notes due in January 2016 rose 3.76 cents on the dollar to 70 cents, cutting the yield to 15.7 percent, according to Trace, the bond reporting system of the Financial Industry Regulatory Authority.

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net.

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

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