Music Is a Loser on Wall Street in 2011

 

Music stocks were much like the broader markets in 2011: a mix of good and bad with an overall decline. Billboard's list of ten music-related stocks fell by an average of 4 percent in 2011. The Dow rose 3.2 percent, the S&P 500 dropped 1.1 percent and the tech-heavy Nasdaq fell 5.5 percent.

The five most music-specific stocks -- Pandora, Live Nation, Sirius XM, Trans World and Warner Music Group -- had an average gain of 7.2 percent. Those stocks' performances ran the gamut from a 42.5-percent decline to a 46.5-percent gain.

Here is the list of ten stocks ranked from best to worst performance. Note: Billboard.biz looked at these stocks over the full calendar year. Pandora has been a publicly traded stock only since June and Warner Music Group was sold to Access Industries in May.

Trans World (TWMC): up 47.4 percent in 2011. Trans World, which operates more than 400 F.Y.E. stores, had a fairly quiet year but succeeded in holding its ground in a difficult climate for brick-and-mortar retail. In the 38 weeks ended October 29, Trans World's revenue was down 17 percent but its net loss improved 67 percent to $14.3 million.

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Warner Music Group (WMG): up 46.5 percent in 2011. The spike in Warner's stock price in 2011 came from its sale to Access Industries in May. The stock closed at $5.65 on January 3, then shot up in late January when news broke in that Warner had hired Goldman Sachs to seek potential buyers. Access's winning bid of $8.25 per share meant a 46-percent gain for the shortened year.

Apple (AAPL): up 25.6 percent in 2011. Not only did Apple's stock perform well in 2011, it finished up 7.1 percent since the death of chairman and co-founder Steve Jobs on October 5. Since Jobs turned over the CEO position to Tim Cook on August 24, Apple stock is up 7.7 percent.

Sirius XM (SIRI): up 11.7 percent in 2011. Sirius XM's stock rarely sits still. In 2011 it ranged from a high of $2.44 to a low of $1.27. Its stock got a boos late in the year when a Citi analyst put a "buy" rating on the company based on strong subscriber growth, good margins and an increase in estimated free cash flow from $400 million in 2011 to $740 million in 2012.

Amazon (AMZN): down 4.3 percent in 2011. Amazon reached a high of $246.71 in October but ended the year at $173.10. October was the month analysts and investors became concerned when Amazon's fourth quarter guidance was below estimates. The company's stock is down 29.8 percent since then. Not even strong sales of Amazon's Kindle Fire tablet has been able to bring the stock back.

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Vivendi (VIV.PA): down 16.2 percent in 2011. Vivendi, the parent company of Universal Music Group, saw its stock slide consistently throughout 2011. Even so, analysts polled by the Financial Times in December were in near agreement that Vivendi will outperform the market -- a consensus that has held since October 2008. A year ago, not a single analyst polled by the Financial Times placed on Vivendi a rating of "underperform" or "sell." Vivendi had a typically busy year adding and subtracting from its vast media and technology holdings. Among the deals were the acquisition of  the remaining 44 percent of SFR that was held by Vodafone, the sale of its stake in NBC Universal to General Electric and the the winning bid for EMI's recorded music division.

Live Nation (LYV): down 27.3 percent in 2011. Live Nation put up good numbers in 2011 considering the state of consumer spending on out-of-home entertainment. The company continued its expansion with acquisitions in ticketing, promotion and analytics. But the weak economy helped push the company's stock down throughout 2011. On the bright side, Live Nation stock finished the year 20 percent higher than its 2011 low of $7.14 set in October.

Best Buy (BBY) down 31.8 percent in 2011. The retailer's stock plummeted in mid-December after the company released disappointing fiscal third-quarter numbers and lowered its guidance for fiscal 2012. The bad news continued when the company announced it had to cancel some online orders for hot items right before Christmas.

Pandora (P): down 42.5 percent in 2011. Pandora went public in June, so its 2011 performance is judged on just over half the year. The company's stock is down big from $17.42 from its first trading down and down even more -- 61.5 percent -- from its 2011 high of $26.00 set on the first day of trading. Early enthusiasm has given way to concerns about Pandora's cost of content, ability to land local advertising revenue and competition from everything from Sirius XM to Spotify.

Sony (SNE): Down 49.5 percent in 2011. A tsunami and computer hackers hit Sony in 2011, but the company's problems run deeper than those one-time events. Sony's difficult year was capped by a ratings drop by Fitch -- from BBB to BBB- -- in December due to losses in TVs and acquisitions unlikely to improve profits. The company predicts it will suffer from it fourth straight annual loss in 2012 and has lowered its sales targets for TVs, personal computers, compact cameras and Blu-ray DVD players.

Twitter: @billboardglenn

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