Vivendi Profit Slips for First Time In Seven Quarters On Music
November 14, 2007 at 9:26 AM (PT)
VIVENDI SA, owner of the world's largest music company, UNIVERSAL MUSIC GROUP, reported its first profit decline in seven quarters, hurt by sliding sales of compact discs. Third-quarter profit excluding one-time gains and some costs, which VIVENDI calls adjusted net income, fell 1.4% to 721 million euros ($1.06 billion) from 731 million euros a year earlier, the PARIS-based company said in a statement today.
VIVENDI has overhauled its music business to become less dependent on CD sales, which are falling. SFR, the mobile-phone company that accounted for 43% of VIVENDI's revenue last year, faces regulatory pressure in a mature wireless market. The company aims to add clients at its CANAL PLUS pay-television unit and sell more video games to keep revenue growing.
VIVENDI's UNIVERSAL MUSIC is "still outperforming the competition, but the music market continues to be very tough," wrote PATRICK WELLINGTON, an analyst at MORGAN STANLEY, in a preview note.
CEO JEAN-BERNARD LEVY said in SEPTEMBER the company was likely to beat its forecast for 2007 adjusted net income of more than 2.7 billion euros, without giving details. The company confirmed that forecast today.
Adjusted net income, the number tracked by most analysts that cover VIVENDI, excludes non-recurring gains as well as amortization of intangible assets.
Net income fell to 578 million euros from 1.56 billion euros a year earlier, when VIVENDI had a gain from the sale of a stake in VEOLIA ENVIRONNMENT SA.