Warner Music profit drops 58%
Warner Music Group said profit fell 58% as CD sales slipped further, but its shares rose as investors hoped that the worst of an industry slump was priced into the stock.
Warner Music shares closed up more than 8% as analysts said it beat Wall Street expectations for its fiscal fourth quarter.
“The numbers were better than people thought; they were certainly better than we thought they would be,†said Bishop Cheen, an analyst at Wachovia. “Clearly, the U.S. team is making it happen where they’re out-performing the market.â€
New York-based Warner’s net income was $5 million, or 3 cents a share, in the quarter ended Sept. 30, down from a year-earlier profit of $12 million or 8 cents.
The quarter benefited from a $12-million settlement from Bertelsmann over music downloading service Napster, but that was partly offset by $9 million in restructuring costs.
Revenue rose 2% to $869 million, but fell 2% when taking out the effect of a weaker dollar. Warner’s strong sellers included Linkin Park, James Blunt and Michael Buble. But the company posted weaker international sales, particularly in Britain.
Analysts polled by Reuters Estimates were looking for revenue of $869.5 million, on average, and a net loss of 10 cents a share.
Shares in Warner Music rose 58 cents, or 8.1%, to close at $7.73.
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