Warner Music Group Corp. on Tuesday reported a loss in its fiscal fourth quarter largely because of big severance costs. Shares plummeted in early trading.
Warner Music Group, with headquarters in Los Angeles and New York, reported a loss of $18 million (-12 cents per share), compared with net income of $6 million (4 cents) a year earlier. The quarter included $14 million in severance and other restructuring costs.
Revenue rose by nearly 1 percent to a higher-than-expected $861 million. While the company benefited from new releases from such artists as Jay-Z and Madonna, it cited the weak economy and smaller margins as consumers shifted from CDs to digital music as reasons for the small growth rate. Excluding the impact of foreign exchange rates, revenue would have risen 4.7 percent.
Analysts surveyed by Thomson Reuters on average expected a profit equal to 5 cents per share on adjusted revenue of $820 million.
For the full year, Warner reported a loss of $100 million (-67 cents), 78 percent deeper than a year ago. Revenue fell 9 percent to $3.18 billion.
"Over the fiscal year, even in the midst of difficult economic and industry trends, we grew our market share to 21 percent in the U.S. and continued progress on our key strategic goals: diversifying our revenue mix, improving our financial flexibility and maintaining our leadership in the industry's digital transition,” Chief Executive Edgar Bronfman Jr. said in a statement.
Shares closed down 86 cents, or 12 percent, to $6.20 on the New York Stock Exchange.
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