Struggling yellow pages publisher Dex One is betting it can reverse the steady decline in its revenue beginning in the second half of next year with a hefty investment in new products and other initiatives.
The Cary company is investing $40 million this year in what CEO Alfred Mockett called "future revenue-generating opportunities." Its ambitious goal is expanding its share of revenue from digital advertising to 30 percent from 10 percent.
"I'm confident we can transform Dex One and return the company back to growth," Mockett told a group of analysts and investment portfolio managers in New York on Thursday. The session was streamed online.
Among the initiatives: a program that guarantees results for advertisers; possible elimination of free yellow pages listings for businesses; and increased bundling of a broad array of print, digital, mobile and social media products offered by Dex and its partners.
And there's more: new technology that will provide advertisers with automatic updates of ad-generated results; expanded use of QR Codes, a bar code readable by smart phones, which can link print ads with coupons and other promotions available online; and the creation of an in-house training academy to keep its 1,500-person sales force current with the latest technology and the company's newest products.
"They said a lot of the right things," said Charles Laughlin, an analyst with market research firm BIA/Kelsey. "It all comes down to execution."
Mockett's upbeat assessment contrasted with the company's projection of a 16 percent decline in revenue this year and its weaker-than-anticipated year-end revenue numbers, which also were released Thursday.
Dex has been hit hard by the ailing economy, which has especially hurt its core small business customers, and a shift away from print advertising. The company, which prints directories in 28 states, filed for bankruptcy in 2009 but emerged early last year after restructuring its debt. It also changed its name from R.H. Donnelley.
Since November, Dex has been on a cost-cutting binge, including eliminating about 500 jobs - or about 15 percent of the total work force.
"That gets us down to fighting weight," Mockett said in a phone interview. The company has about 400 workers in the Triangle and 3,200 overall.
Revenue for all of 2010 totaled $1.78 billion, short of the company's forecast of $1.8 billion and down 19 percent from 2009.
Dex shares closed Thursday at $5.98, down 22 cents. Its shares fetched more than $30 last April.
Testing ... 1, 2, 3 ...
Dex has been testing the new advertising concept in the Phoenix market and recently expanded it to Minneapolis and Seattle. Mockett declined to provide a time table for rolling it out to other markets.
Dex has more than 2 million free one-line business listings in its directories. Deleting them would enable the company to convert some of those businesses to paying customers, said Mockett, as well as produce better results for advertisers by eliminating listings of some of the competition.
The free listings hark back to the time when telephone companies charged more for business phone lines and threw in the free yellow pages listings to justify the added cost.
The telephone companies no longer charge that premium, he said. However, since Dex produces and distributes its yellow pages directories under an exclusive license with telephone companies in the markets where it operates, it needs their OK to eliminate the freebies.
That strategy also carries "a risk that you undermine the completeness of the directory," said Laughlin, the analyst. "I'll take a wait-and-see approach."
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