Should You Buy It? Hang Up on R.H. Donnelley

R.H. Donnelley(RHD Quote) cut its 2007 sales guidance Monday evening, causing at least two analysts on Tuesday to downgrade the yellow pages publisher. The stock fell $2.83, or 4.64%, to $58.11 on Wednesday.

Management cited poor advertising demand from the housing slump in the Florida and Nevada markets. Previously forecasting "modestly positive" advertising revenue growth this year, the company now expects sales to come in flat to down 1%.

R.H. Donnelley prints about 80 million directories each year, reaching about 30 states, including growing markets such as Phoenix, Las Vegas and Orlando. The company is now the third-largest publisher of yellow-pages books, following last year's purchase of Dex Media for $9.5 billion including assumed debt. ...