Vivendi U stock hit again
Investors brace for writedowns
Jittery investors braced themselves for the company's quarterly results, to be released today, causing Viv U's stock to slide 5% Tuesday afternoon in Paris. Stock lost 5.25% there Monday when the reports of the writedowns first surfaced.
While most analysts seemed unruffled Monday by the idea of a $4.85 billion writedown, the reduction could have a serious financial impact on the ailing media giant when it comes to securing much-needed long-term debt financing, especially if the company's sales are not up to snuff.
In March, Viv U reported a $16.6 billion in writedowns, and the company is carrying a $17 billion debt load, due to ousted Viv U topper Jean-Marie Messier's acquisition bender.
'A lot of money'
"Ten billion dollars is a lot of money," one buy-side analyst said. "I don't think they will ever find themselves in a position where they can't secure financing, but the question is, how much interest will they have to pay on that financing? Any deal they strike with the banks could end up being a lot less favorable to them."
The $10 billion estimate of the company's writedowns was reported Tuesday by the Wall Street Journal, following a report in the French press Monday that said the company would report writedowns of about $4.85 billion.
Adding to the company's woes, law firm Berger & Montague filed a U.S. class-action suit against Viv U in New York Monday, alleging the company issued misleading statements intended to drive up the price of its stock.
The suit, filed in the U.S. District Court for the Southern District of New York, also charged that Viv U misstated its earnings.
The suit is separate from a class-action civil lawsuit filed against the beleaguered media concern by about a thousand Gallic investors, accusing the directors of Viv U of "fakery" and the "distribution of fictitious dividends."
Fourtou in arena
Investors and analysts will get their first chance today to quiz Fourtou. Mainly, they will be looking to find out what the company's cash situation is, as well as what the topper's plan is for the disposal of Viv U's assets.
One of the scenarios related to Fourtou's disposal plan was the sale of the company's games unit, Vivendi Universal Games, for $2 billion.
But in a surprise move, Viv U said Tuesday that the games unit will open a development studio, making a prompt sale unlikely.
Black Label Games, under the umbrella of Vivendi Universal Games, will develop products based on Viv U's existing library as well as on content licensed to them from external partners.
