Reader's Digest ( RDA) reported a 21% drop in second-quarter profit Wednesday and lowered its full-year earnings guidance because several business segments will not be as strong as it originally thought.

Shares of the Pleasantville, N.Y.-based publisher were lately off 64 cents, or 4.4%, at $13.86 on the news.

In the quarter ended Dec. 31, the company earned $66.5 million, or 67 cents a share, including charges, compared with $84.2 million, or 84 cents a share, in the prior-year quarter. Excluding items, the company earned 73 cents a share, missing analysts' estimates for 80 cents a share.

Total revenue was $796 million, down 4% from last year's $831 million. The company blamed it partly on a 5% decline in sales at its international businesses, which was partially offset by favorable foreign exchange.

"We improved our free cash flow despite generally lower operating performance," the company said. "Results for consumer business services were disappointing, international businesses came in about where we expected and RD North America surpassed our expectations, with especially strong results at Reader's Digest magazine."

Restructuring charges of 6 cents a share in the quarter related to the company's program to reduce overhead costs, which began in the second half of fiscal 2003. The company has reduced its payroll by more than 500 in the past twelve months.

On a positive note, the company said it made progress during the quarter on its two-year plan to achieve sustainable revenue and profit increases by fiscal 2005. The company cited re-engineering and cost-reduction activities to cut a minimum of $70 million in costs by fiscal 2005.

Looking ahead, the company lowered its full-year EPS guidance to 65 cents to 75 cents a share from 75 cents to 85 cents a share, excluding items. The Thomson First Call consensus is 75 cents a share.

Reader's Digest expects modest profit and revenue increases in the second half of the year in its consumer business services unit, but the company does not expect it to offset the declines of the first half. International business profit is expected to grow by double-digits in the second half, leading to full year low double-digit gains.