January 9, 2009 / 6:34 PM / in 10 years

UPDATE 2-RR Donnelley cuts 2008 profit outlook, shares fall

(Adds details, analyst comments, share movement)

By Bijoy Anandoth Koyitty

BANGALORE, Jan 9 (Reuters) - Printing services provider R.R. Donnelley & Sons Co (RRD.N) cut its full-year earnings outlook, hurt by decreased volumes, sending its shares down 11 percent.

R.R. Donnelley, which gets about 60 percent of its revenue from print and related services such as magazines, catalogues, directories and inserts, has been feeling the heat as a slump in advertising takes its toll on U.S. publishers.

“I had a feeling the earnings would be under pressure, but it looks like it is lot worse than I thought,” The Benchmark Co analyst Edward Atorino said by phone.

The outlook cut can also be due to some negative currency effects in the fourth quarter, reversing the positive effects the company earlier had, Atorino said.

R.R. Donnelley said it expects 2008 earnings from continuing operations of $2.80 to $2.90 a share, down from its previous forecast of $3.08 to $3.11. It sees full-year revenue of about $11.5 billion.

Analysts on average were expecting a profit of $3.08 per share, excluding items, on revenue of $11.84 billion, according to Reuters Estimates.

For the fourth quarter of 2008, the company forecast a profit from continuing operations of 51 cents to 61 cents a share, excluding items, versus analysts’ estimate of 79 cents. It sees revenue of about $2.7 billion for the period.

The impact was across the board for R.R. Donnelley as the company’s operations ranged from magazines, which are advertising driven, to financial services, which are driven by initial public offerings, CJS Securities analyst Charles Strauzer said.

“As a consequence of the unpredictable global environment and its potential impacts on competitors and customers, we do not expect to provide full-year earnings per share guidance for 2009 on our February 25 (earnings) conference call,” Chief Executive Thomas Quinlan said in a statement.

The company said it would pay its regular quarterly dividend of 26 cents a share on March 2 to stockholders of record as of Jan. 23.

Shares of R.R. Donnelley fell to a low of $13.41 before paring some losses to trade down $1.52 at $13.52 Friday afternoon on the New York Stock Exchange. The stock has shed more than 60 percent over the past one year.

For the alerts, please double click [ID:nWNAB8296] (Additional reporting by Arup Roychoudhury; Editing by Mike Miller and Deepak Kannan) (arup.roychoudhury@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: arup.roychoudhury.reuters.com@reuters.net))

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