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VIVENDI UNIVERSAL Q3: A RETURN TO PROFIT

Music Group Posts Smaller Profit
Vivendi Universal posted a profit for the third quarter while warning that it would have not so good results for Q4, because of the slumping dollar, and “excellent performance shouldn't be extrapolated to the fourth quarter of 2003, due to the seasonality of certain businesses.” The profit did beat analyst expectations of a €135 million loss.

VU reported a net income of €131 million ($156.9 million) for Q3, compared with a loss of €1.23 billion in the year-earlier quarter. Revenue dropped 59% to €5.9 billion from €14.55 billion compared with a year ago, because Vivendi has started selling off a lot of its properties.

In the news that means something to you, Universal Music Group posted a sharp decline in both operating profits and revenues. The division reported a profit in Q3 of €4 million, compared to a profit of €16 million last year. This was attributed to an impact on margins because of lower sales and a higher proportion of distributed labels and joint activity, though there were lower costs in marketing and overhead. Revenue for the music group was reported at €1,115 million.

For the first nine months of the year, UMG reported operating losses of €38 million, based on revenue decline, restructuring costs, and one-time income from asset sales in 2002, offset by reductions in marketing and catalogue amortization expenses.

The official rundown included that UMG is in the process of cost-cutting initiatives that include reducing prices, noting that the pricing changes is “necessary for the long term health of the industry,” though it may have a negative impact on the near-term results. Those same cost-cutting measures “take into account the realities of the declining music market.”

Ah, good times.

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