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"Conditions in the music industry are bad, but I didn't think it was this bad for EMI."
——an analyst
EMI STOCK PLUMMETS
British Music Giant Shares Down 30%
British music giant EMI Group lost more than a quarter of its value on the U.K. stock market Tuesday.

The company, which is the home of the Beatles, Janet Jackson and Lenny Kravitz, had warned that its profits would slide 20% this year. EMI said it had seen a "marked deterioration" in conditions, with recorded music sales particularly hard hit by the downturn in the United States.

"Conditions in the music industry are bad, but I didn't think it was this bad for EMI," said one analyst. "The scale of the fall in sales in the second quarter and September were surprising after a relatively good show in the first quarter."

EMI had much higher hopes, for instance, for Mariah Carey’s first Virgin release, Glitter, which debuted at #6.

After failing to merge with Warner Music Group last year and then Bertelsmann Music Group this year, EMI shares have languished in recent months. Shares were down 30.3% at 230 pence in high volume trade, their lowest level in at least a decade. Trading below 300 pence ($4.38), some industry observers noted EMI could become a takeover target to a predator outside the music industry.

As a result, EMI, the world’s third largest recorded music company, may be facing more job cuts and restructuring of some labels. The company is also mulling the possibility of exiting from manufacturing and distribution. EMI said on Tuesday it was in talks with a number of parties and expected to make an announcement at the turn of the year.

EMI said its cost cutting efforts would eventually reap 65 million pounds ($95 million) of annualized benefits, with part of that to impact this year. However, such measures will involve 100 million pounds ($146.1 million) of restructuring provisions, with 15 million pounds ($22 million) to be included as a first-half charge.

For the second half, EMI said it expected cost savings and a strong release schedule including albums from Robbie Williams and Pink Floyd, to bring recorded music operating profit in line with last year while publishing should show a small improvement. EMI makes the bulk of its profits in recorded music.

"Notwithstanding the first half setback, and the ongoing uncertainty in our markets, we expect a much improved performance from recorded music in the second half, together with another good contribution from music publishing," EMI Chairman Eric Nicoli said in a statement.

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