Warner Music loss widens as sales plunge
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Warner Music Group posted a deeper loss on Tuesday as its sales declined more than expected, sending the company's shares down more than 11 percent.
The world's third-largest music company said it also lost market share as it battles with a difficult industry transition from CDs to digital music.
Chief Executive Edgar Bronfman declined to comment on reports from last month that the company has put itself up for sale while simultaneously exploring the possibility of buying smaller rival EMI Group.
Warner Music shares jumped nearly 30 percent when news of possible consolidation between the two companies was first reported.
Bronfman said the company's release schedule in the all-important December quarter did not meet its own expectations.
"We had a lot of releases in the December quarter and by and large, they did not do as well as expected versus other companies," Bronfman said on an analyst conference call.
"We don't like to see ourselves losing share, and that happened."
New York-based Warner Music competes with other major music companies including Vivendi's Universal Music Group and Sony Corp's Sony Music Entertainment. All music companies have struggled to cope with adapting to new digital-based methods to sell music as consumers buy less music in dollar terms.
"Against a backdrop of shrinking CD sales, we think (the quarter) reflected a competitive release slate and decelerating digital growth," said Standard & Poor's analyst Tuna Amobi.
He said shares were under pressure because of "a combination of slowing digital revenue, market share dip ... and lingering uncertainty with the outcome of the current exploration of strategic options."
For the fiscal first quarter, the company posted a loss of 12 cents a share, compared with a loss of 11 cents a share in the year-ago period.
Revenue fell 14 percent to $789 million, below average estimates of $798 million.
Warner Music's results also reflected a slowing down in growth of digital sales after several years of double-digit growth across the industry.
Its digital revenue rose 2 percent to $187 million from a year ago, but it was down 5 percent sequentially from the previous quarter.
Shares were down 71 cents or 11.4 percent at $5.52 on the New York Stock Exchange in early afternoon.
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