In January I predicted (see Notable Bankruptcies of 2009: Q1) that “major” bankruptcies in 2009 would challenge the 383 mark set in 2001 (the high-water mark after the dotcom bubble). I even suggested that it was possible that we could exceed 400 “major” bankruptcies in 2009. According to Bankruptcydata.com, there have been 156 “major” filings thus far in 2009. Assuming that bankruptcies are equally distributed throughout the year, this puts us on pace for 312 bankruptcies. That is tracking well shy of my prediction. In fact, bankruptcies were down significantly from Q1 to Q2, as there were 90 bankruptcies in the first quarter but only 66 in the second. That stylized fact begs the question: Is that a “green shoot”[More...]

Guest Post by Jim Kaplan, Chairman, Audit Integrity The Wall Street Journal article published March 10, entitled “Moody’s Aims to be Ahead of Defaults,” was a real eye-opener, as was the response to the article. Moody’s Corporation has taken a bold and positive step in publishing a list of Companies with the highest probability of default.  [...]

Each of these companies recently sported a multi-billion dollar capitalization, but now is a microcap (market cap < $250M).  All figures below courtesy of Yahoo! Finance and Yahoo! Stock Screener: 1.  RH Donnelly (NYSE:RHD) Market Cap:  $23.4M % off 52-week high: 99% Employees: 4,700 Description: RH Donnelly is one of the nation’s largest providers of telephone directories and online yellow [...]

Strong cash flow and fat profit margins usually insulate the media industry during times of economic stress, but that may not prove to be the case in the current downturn because of secular pressures on traditional media as advertisers move to new platforms, according to Fitch Ratings. In its inaugural “Credit Encyclo-Media” report, Fitch said higher-than-usual debt [...]

Almost done with my trip, goin’ to Canada today, then back to NYC next week…[More...]

R.H. Donnelley Corporation's (Public, NYSE:RHD) one year loss in share price is worse than the Subprime mess of banks and bond insurers, RHD shares are now down 90% in the last 12 months. Since May of last year, R.H. Donnelley's market cap has erased $5.4 billion dollars into thin air, shareholders have lost almost everything.  Now they have cut their dividend and Deutsche Bank just cut their target price to $5 a share.  Can it get any worse for the Yellow Pages publisher?

Just look at the drop in share price since last May, it's Britney and Jamie-Lynn Spears train wreck bad:

R.H. Donnelley Corporation's Fall from Grace
No of Outstanding Shares	Date	Share Price	Total Market Cap
71,270,000	May 4th, 2007	$83.34	$  5,939,641,800.00
71,270,000	Oct. 12th, 2007	$63.03	$  4,492,148,100.00
71,270,000	Nov. 16th, 2007	$42.96	$  3,061,759,200.00
71,270,000	Jan. 18th, 2008	$25.11	$  1,789,589,700.00
71,270,000	Feb. 27th, 2008	$17.58	$  1,252,926,600.00
71,270,000	Today (2/29/2008)	$  7.42	$     528,823,400.00
Since May of Last Year the Loss Totals			$ (5,410,818,400.00)

It's hard to believe this company has any money left, let's review the spending they did in the last year:

They bought back $90 million of stock last quarter. Fine investment at the prices they paid for, I bet seeing $7 on Google Finance made them feel great this morning, TGIF.

Oh yea, that's right, they paid $345 million last February for Business.com.  Do you know anyone that uses Business.com?  Here's the link, www.Business.com, have fun, it looks like every other big name domain site that contains a link here and link there, how is this worth $345 million again? Sure the site rakes in millions every year for clicking on this and a search to some other site, but paying $345 million?  Officers at RHD, I'll sell you this domain for only $1 million and throw in a No. 3 from McDonalds.  Did you want Coke, Dr. Pepper, or maybe that wonderful Orange Soda they make?

Despite R.H.'s spending, they still managed to bring in Q4 revenue of $680 million, which is a 10% increase from the $618 million they had in Q4 2006.  Plus, they narrowed the net loss to $12.1 million from $50.8 million, not bad.

But then again, you still have that 90% drop in share price.  Not so good.  That No. 3 is starting to sound tasty isn't it? You can buy 2 of them or 1 share of RHD, the problem is RHD shares don't come with Orange Drink. 

The larger problem besides their compounding debt which comes in at $1.2 billion of 8.875 percent debt due in 2016 (thank you Bloomberg.com) is who would really buy a company like R.H. Donnelley or their business divisions? 

Do you want to buy Business.com off of them?  How about the Yellow Pages?  Do you use the Yellow Pages anymore?  They work great at my house as a substitute for booster seats for small children but other than that, they are useless. 

WeBeBroke.com summed it up perfect last week in his Fake Investment Tip of the Day:

Downside: Shares in yellow pages company R.H. Donnelley (NYSE: RHD) are down 70% over the past year (now 90%), yet further proof that investors view telephone books as a dying industry.

Upside: Three out of five traveling businessmen still view yellow pages escort ads as the definitive guide to “getting off” on business trips—after the Internet, pay-per-view TV and the corner of 51st and Broadway.

So maybe Business.com can help out the company?  Think again, Jake Winebaum, the founder of Business.com, is stepping down from his role as president of the company's interactive unit to "spend more time with his family."

Fellow Masters, help me find something positive to say because it really comes down to will they sell their businesses off or declare Chapter 7 or 11?

Who would buy them?  Carl Ichan?  Rupert Murdoch? 

Let's face it, R.H. Donnelley Corporation is in the dumpster and without their Orange Crush.  Follow me, don't follow me. I've got my spine, I've got my orange crush.

Article by Frank Lara Jr. Contributor at TheStockMasters.com and to the Master Picks Newsletter
Disclaimer: The Author does not have any positions in RHD.

Microsoft, Verizon, Nokia, Ericsson, Pioneer Natural Resources, Orthovita, Neurocrine, Polo Ralph Lauren, JC Penney