Dex One, the Cary company that publishes yellow pages directories in 28 states, is projecting another down year in 2010 but believes that the worst of its revenue woes are behind it.
The company formerly known as R.H. Donnelley forecast Thursday that ad sales will fall 12 percent to 15 percent this year, which would mark an improvement over the 20 percent decline it experienced in 2009. Ad sales are a leading indicator of future revenue.
"While our sales results are certainly disappointing," CEO David Swanson said during a conference call, "they largely reflect the current market realities and the challenges local businesses have been facing."
Dex One's sales results are in line with other large yellow pages companies, said Charles Laughlin, an analyst with market research firm BIA/Kelsey.
The fourth-quarter and full-year earnings released Thursday were the first financial results Dex released since emerging from bankruptcy at the end of January. A drop in ad revenue and its heavy debt load steered Dex into bankruptcy, where it restructured and reduced its debt by $6.4 billion. It also re-named itself Dex One post-bankruptcy.
Fourth-quarter ad sales fell 22 percent. Revenue for the quarter was $500.8 million, down from $630.4 million a year ago.
The company lost $6 billion for the quarter, or $87.05 per share, as the result of a $7.3 billion non-cash charge. A year earlier, the company lost $362.4 million.
For the full year 2009, the company posted revenue of $2.20 billion, down from $2.62 billion a year earlier.
Dex reported that earnings before interest, taxes, depreciation and amortization - a key indicator of performance for companies with sizable debt - was $1.15 billion, down 19 percent from 2008.
The company lost $6.5 billion for all of 2009, widening the loss of $2.3 billion a year earlier.
As advertisers shift their advertising away from traditional media, Dex is positioning itself as a "marketing services company." It has been expanding beyond its print directories to other media, including online at Dexknows.com and mobile searches and phone searches through 1-800-CallDex - as well as offering services such as search engine optimization.
In all, the company now has seven "platforms" for generating revenue. Moreover, it no longer sells print-only ads, choosing instead to bundle print ads with other ad media.
"From a product standpoint, Dex One has evolved far beyond its Yellow Pages roots," Swanson said.
Other industry players also are downplaying the print yellow pages business, even though it drives the lion's share of their revenue, Laughlin said. He estimates most companies such as Dex One whose yellow pages directories are No. 1 in their respective markets generate 85 percent or more of their revenue from their printed directories. Dex One doesn't break out revenue by media.
Swanson said that of the 110,000 advertisers Dex lost as customers last year, a "surprisingly low number" migrated to print or online competitors.
Instead, between one-half and two-thirds of those advertisers either went out of business or didn't meet Dex's credit standards, said Steven Blondy, chief financial officer. Most of the rest simply "put the money back in their products," he said.
At the same time, Dex also added 45,000 new clients that generated $100 million in advertising sales, Blondy said.
Dex has nearly 500,000 advertisers nationwide. Consumers consulted the company's products more than 1.5 billion times last year as they searched for businesses providing the products or services they sought.
Dex One shares closed Thursday at $30.49, up 74 cents. Its shares opened at $31 when the company emerged from bankruptcy.
