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NEXT CUT IS THE DEEPEST

EMI Restructuring Will Shrink Workforce 10-15%
According to those close to decision process, EMI plans to lay off 1,000-1,500 staffers worldwide in a wholesale restructuring of the beleaguered music group.

In a memo to the staff Thursday, EMI Recorded Music rulers Alain Levy and David Munns confirmed that the restructuring will begin next Wednesday, March 20.

Since taking over the music unit six months ago, Levy has been scrutinizing the company’s global operations in search of redundancies and dead wood. During that time, EMI has issued two profit warnings amid a depressed market.

The moves that are about to occur are expected to result in an annual savings of more than $140 million, according to the Financial Times of London.

The coming cutbacks represent 10-15% of the company's workforce of approximately 9,000. Some insiders are saying the total number of pink slips could exceed 2,000. Because of the sheer magnitude of these cuts, they will likely go down in increments rather than all at once in order to lessen the shock.

Additionally, Levy plans to sell off some of EMI's properties, including the company's stake in U.K.-based retail chain HMV Media, in order to reduce its debt, which is hovering in the vicinity of 1 billion pounds (or $1.4 billion).

EMI warned last month that its profit before tax, amortization and one-time items—like the $28 million it shelled out to Mariah Carey to go away—would be about $215 million. The company’s fiscal year ends March 31.

Not surprisingly, word of the restructuring spiked EMI shares today on the London exhange; it closed up 3.7 per cent to 353p. Despite the rise, EMI's stock price is still close to the price it began at the start of the year. Two profit warnings in six months have kept the price down.

On today's news, Schroder Salomon Smith Barney (SSSB) raised its rating of the stock from "neutral" to "outperform" and raised its price target from 300 pence to 400 pence .

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