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"Nobody is expecting good news from the music industry at the moment and the numbers were in line with where EMI guided the market in September. The further deterioration in trading is disappointing but the shares have been lifted by the prospect of greater savings."
——analyst Paul Richards
EMI POSTS FIRST-HALF LOSS
Positive Spin Highlights: Rise in Shares, Potential Strong Second Half, Guy Named Alain
EMI posted an adjusted pre-tax loss of 2 million pounds, or $2.86 million, in the six months ending September, compared to a previous profit of 59.1 million.

The usual suspects were blamed for the loss: waning CD sales, piracy, economic slowdown following the Sept. 11 terror attacks, failure to behold the power of cheese.

Despite posting the loss, EMI gave the numbers a positive spin. After all, the 2 million pound figure was on the upper side of analysts' forecasts, which put the losses between break-even and 9.5 million pounds.

The company also said it would maintain its global marketshare at 14% for the full year, despite falling to an interim operating loss because of a slump in profits at its recorded music division. And it expects a better second half driven by a stronger release schedule led by artists such as Lenny Kravitz, Pink Floyd, Mick Jagger and Robbie Williams.

And EMI shares rose 4% after the company said its restructuring would deliver greater than previously expected savings.

"Nobody is expecting good news from the music industry at the moment and the numbers were in line with where EMI guided the market in September," said analyst Paul Richards. "The further deterioration in trading is disappointing but the shares have been lifted by the prospect of greater savings."

EMI, the world's third biggest recorded music company, has been reeling from two failed mergers and a lack of big hits, forcing it to warn in September that full-year pre-tax profits would slide 20%.

Meanwhile, EMI let between 50-70 people go at Virgin and Capitol/Priority on both coasts, on Friday (11/16) before the numbers were announced.

There is hope that new label chief Alain Levy will right the financial ship.

"[Levy's] strategic review of the business, which will be completed in early 2002, is expected to result in a restructuring plan that will deliver greater savings than previously indicated, and will require a higher exceptional provision," said EMI Chairman Eric Nicoli.

Levy is set to meet the financial community later today.

EMI held its first half dividend steady at 4.25 pence. But after insisting in September that it would also hold its full-year dividend, the group did not rule out cutting it. Analysts believe the group may be under pressure to cut its full-year payout if trading deteriorates much further.

"The level of the final dividend will be set in light of our financial performance and prospects at the time and in the context of our strategic review of the recorded music business," Nicoli said.

Despite the gloom, Nicoli said the group still aimed to hold its full-year global marketshare at 14%.

Detailing its results, EMI said operating profits slid to 43.1 million pounds ($61.59 million) from a previous 110.9 million pounds, on revenues of 1.067 billion pounds. Analysts had forecast a profit of between 42.8 and 46.3 million pounds.

"In uncertain market conditions, it remains difficult to predict the outcome for the full year," Nicoli said. "The final result will depend critically on market trends which have shown some deterioration in the past two months."

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