Idearc Drops on Economic Worries

Article Excerpt

IDEARC INC. $7 (New York symbol IAR; Income Portfolio, Consumer sector; Shares outstanding: 146.8 million; Market cap: $1.0 billion; WSSF Rating: Average) is down 80% from its peak of $38 in August 2007. That’s largely due to fears that a slowing economy would hurt revenue growth at its Yellow Pages telephone directories business, which accounts for 90% of its total revenue. Revenue at Idearc’s Internet division, including the popular SuperPages.com search site, is growing strongly partly due to an acquisition. But that’s not enough to offset weakness in the print operations. In 2007, Idearc’s revenue fell slightly to $3.19 billion from $3.22 billion in 2006. Earnings per share grew 0.9%, to $3.32 from $3.29. Cash flow per share fell 37.0%, to $4.64 from $7.37. Idearc’s main appeal is its $1.37 dividend, which now yields a high 19.6%. Capital expenditures in 2007 were just $0.32 a share, so Idearc should be able to maintain the current rate for now. Even if it cut…