(Recasts, adds details, share movement)
Feb 29 Shares of R.H. Donnelley RHD.N
continued their slide for the second consecutive day Friday and
hit their lifetime low, a day after the company warned of lower
earnings, even as Deutsche Bank downgraded the stock.
The brokerage lowered its rating on the yellow pages
publisher's shares to "sell" from "hold" and cut its price
target to $5 from $25, citing leverage concerns.
"Things got worse very quickly, and believing in the online
offset is harder," analyst Paul Ginocchio wrote in a note to
He said the company believes much of the issues are
economic, but 2009 will also be tough as rising broadband and
mobile search penetration will make selling print difficult.
"We see limited ability to reduce paper, printing and
distribution costs without impacting usage, thus R.H. Donnelley
seems to face very difficult decisions ahead," Ginocchio wrote.
The company had dropped its dividend plans and said a key
executive was leaving the company.
With the departure of Jake Winebaum, founder of
Business.com, so quickly after the portal was acquired by R.H.
Donnelley, the company's hopes of offsetting print declines via
a combination of media looks less reliable, he said.
The analyst said while there were potentially no near-term
triggers to cause financial distress, the deteriorating credit
metrics would make investors further question whether there was
any value to the equity.
More sales people are needed to stabilize revenue, limiting
the company's ability to cut costs, he said.
Shares of R.H. Donnelley's peers Idearc Inc IAR.N and
Yell Group YELL.L also took a beating for the second day.
Idearc shares hit their lifetime low at $3.57 in morning
trade but recovered partially and were down 19 percent at $4.66
in afternoon trade on the New York Stock Exchange.
R.H. Donnelley shares were trading down 24 percent at $7.14
in afternoon trade. The shares had lost almost 50 percent of
their value on Thursday.
(Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by