S&P: R.R. Donnelley outlook negative

Standard & Poor's said it revised its outlook on R.R. Donnelley & Sons Co. to negative from stable and affirmed the ratings, including the BBB+ long-term corporate credit rating.

The outlook revision follows management's announcement that it revised its full-year 2008 earnings-per-share guidance due to a rapid decline in print volumes that exceeded management's original expectations for the quarter that ended in December.

S&P said that although the announced revision is consistent with its previous expectations that operations would underperform management's original projections, the pace of revenue declines and the agency's expectation for continued deterioration has prompted the revision to the outlook.

The BBB+ rating reflects R.R. Donnelley & Sons' leading market position, scale of business operations, diversity across multiple segments of the highly fragmented printing industry and strong cash flow base, the agency said.

The cyclical nature of the industry, the intense pricing pressure that typifies the industry, a significant level of industry consolidation and an expectation for revenue declines over the near term somewhat temper these positive factors, S&P said.

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