Ad sales decreased 16.2 percent to $129.4 million from a year earlier, led by drops of 30.1 percent in classifieds and 13.3 percent in retail ads, the New York-based company said today in a statement. July revenue was $235.9 million.

The worst U.S. housing slump in a generation is forcing department stores and home-improvement businesses to scale back advertising, crimping sales at New York Times and competitors Gannett Co. and McClatchy Co. Chief Executive Officer Janet Robinson is accelerating cost-cutting efforts.

The sales drop was ``roughly in line with expectations,'' Alexia Quadrani, an analyst at JPMorgan Chase & Co. wrote in a report today. The ad weakness was comparable to the 16.4 percent drop in June, said New York-based Quadrani, who rates the stock ``neutral.''

Spending by large national advertisers fell less than in June, preventing an accelerated decline in total ad sales. Robinson had said on a conference call last month that the decline might get worse in July as advertisers tighten their budgets.

Last week, Gannett, the largest U.S. newspaper owner, said publishing-ad revenue fell 16.7 percent in July, accelerating from 16.3 percent in June. McClatchy, publisher of the Miami Herald, reported a 19.3 percent slide in July ad sales, compared with 19.5 percent the prior month.

NYTimes.com

Ad revenue at the News Media Group, including the New York Times, Boston Globe and their Web sites, fell 17.9 percent to $119.9 million, led by a 24.5 percent decline at its New England publications. National ad sales fell 12.6 percent in July, after a 16.8 percent drop in June. Circulation sales fell 0.5 percent.

Revenue at the New York Times' ConsumerSearch.com and About.com unit rose 14.6 percent to $9.5 million. Ad revenue at the newspapers' Web sites increased 0.9 percent and will probably rise more than 10 percent in August, helped by rising demand for display ads on NYTimes.com, the company said.

New York Times fell 22 cents, or 1.7 percent, to $12.66 at 4:04 p.m. in New York Stock Exchange composite trading. The shares have retreated 28 percent this year. A year ago the stock traded for $22.10.

Wachovia Capital Markets analyst John Janedis cut his third-quarter earnings estimate today to 3 cents a share from 4 cents. Analysts expect profit, excluding some items, of 6 cents a share, the average of seven estimates compiled by Bloomberg.

Janedis, who's based in New York and expects the stock to underperform the market, expects ad revenue to ``remain soft for the next few quarters.'' He projects ad revenue will fall 15.9 percent this quarter, compared with an earlier estimate of 15.2 percent.

To contact the reporter on this story: Sarah Rabil in New York at srabil@bloomberg.net

Last Updated: August 26, 2008 16:17 EDT

bloomberg.com/apps/news