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SuperMedia's CEO Discusses Q3 2011 Results - Earnings Call Transcript

As I look at the third quarter, there are 3 key headlines. First, we have continued to address the expense side of the business, and our margins for the third quarter were 39.3% versus 35.2% on an adjusted basis Q3 year-over-year. Next, ad sales continue to be in the mid-teen decline year-over-year. And finally, we are excited about our new approach to the marketplace and are encouraged by some of the early results we are seeing in our trials.

Now looking at expenses. I'm encouraged that across the business, in all departments, we are seeing our teams find efficiencies. In real estate, we consolidated locations and negotiated better deals. In marketing, we've improved our distribution and exited markets that were not meeting our standards for profitability. Our digital group has found ways to improve the cost for acquiring traffic, and our sales departments have found smarter ways to service our customers by restructuring to a closer, more geocoded approach. The list goes on as we continue to find opportunities to improve our cost structure by challenging everything we do.

Regarding ad sales, the top line, we continue to see declines in the mid-teen range. Part of this is related to economic issues facing small and medium-sized businesses. Another part is related to the proliferation of options in the marketplace and the confusion small businesses face as they try to reach and influence their customers. On average, a small business may be contacted over 30x a month from someone who has a new deal or a product to sell. I believe we were in a period where business owners are trying many of these options. Our Yellow Pages advertisers, who still represent our largest segment of business, continue to see value from their advertising. As we monitor each month with our local call tracking lines. Last, our new approach was tested over the summer in numerous pilots and multiple markets. We work hard to understand our customers, and how we can help them grow. We have learned a lot and are continually refining our approach to these markets. Our end-to-end service approach is being well received, and we just started rolling this out in October.

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