Levy
LONDON -- In the British music major's second profit warning in six months, EMI has said that pre-tax profits will be £150 million ($213 million) for the year ending March 31, below analyst expectations.
EMI also has upped EMI Music Publishing chief financial officer Roger Faxon to CFO of EMI Group, replacing Tony Bates, who will leave the company in May. In addition, Stuart Ells, CFO of Andrew Lloyd Webber's Really Useful Group, has been named CFO of EMI Recorded Music.
The changes are the latest moves in EMI Recorded Music chief exec Alain Levy's sweeping restructuring scheme for the troubled music giant.
Earlier this week, the company tapped Levy deputy David Munns to run EMI's troubled North American operations. The British major also replaced two top managers at Virgin Records in the U.S. and unveiled plans to move the label to New York from Beverly Hills.
Ex-Polygram chief Levy came onboard himself only last October, replacing ousted topper Ken Berry.
"We are now in the middle of a major redesign of EMI Recorded Music which will result in a reduction in our cost base but will also make us more efficient and more competitive in order to drive growth," Levy said.
"Missing a target is not good news -- but most important is the shape of things to come," he added.
Analysts had expected EMI's bottom line to come in roughly between $230 million and $280 million.
U.S. woes
EMI said an upbeat second half of the year in the U.K. and Europe did not compensate for "underperformance" in the U.S. -- the source of most of the company's woes -- and the continuing downturn in Latin America and Asia.
The company's U.S. operations will take another hit from charges relating to the unwinding of its ill-fated $80 million contract with Mariah Carey. EMI said last month it would pay Carey $28 million to walk away from the label, in addition to $21 million already paid to her under the pact. Still more charges are expected from Virgin's East Coast move.
On the up side, EMI said its Music Publishing division was on track to better last year's positive trading. Publishing unit has been a consistently strong performer since chief exec Martin Bandier took the reins a decade ago.
Takeover target again?
EMI's profit warning last September cut its stock price by a third. Shares closed down 6.9% on the London stock exchange Tuesday. Stock price has tumbled more than 40% over the past year, leading to increasing chatter among industry watchers that EMI may yet again be ripe for takeover.
Among the usual suspects mentioned by observers as possible suitors are Bertelsmann music unit BMG as well as nonmusic congloms Disney and Viacom. EMI already has tried to merge with both BMG and AOL Time Warner over the past two years but was thwarted each time by European regulators.
Next on EMI's agenda: determining how it will repay $1.56 billion in debt over the coming year. Company said it would unveil details of additional savings measures on March 20.
(Justin Oppelaar in New York contributed to this report.)
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