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On today’s second-quarter earnings call, R.H. Donnelley executives revealed that the ripple effect of the housing slump has affected growth in its Embarq markets, which have been among the most stable in recent years. Fortunately for RHD, improvements in Chicago (AT&T) and the Dex markets has somewhat blunted the impact of a softening Embarq business.

Ad sales overall were up slightly during the second quarter (+0.2%), but the company at this stage cannot be certain the Embarq business will grow in 2007. As CEO Dave Swanson put it, the housing slump “is the biggest issue constraining our results right now.”

According to RHD, the housing slump has had its strongest impact in Las Vegas and Florida in particular. During the Q&A, COO Peter McDonald cited as evidence the fact that the decline in the number of housing permits is much more precipitous in Nevada and Florida than it is in other parts of the country.

On the plus side, RHD says its perennially troubled Chicago market has emerged as a growth driver. The company sites the full rollout of its “triple play” offering (print, IYP and search engine optimization) in Chicago as key to turning that market around. The company held out hope that the triple play would also help boost results in other large markets, particularly in the Dex territories, that are struggling today.

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