Music sales slow Vivendi
EmptySluggish music CD sales and a weak dollar, which dragged down earnings from its stake in NBC Universal, hurt Vivendi's bottom line in the third quarter, causing the conglomerate to post its first year-over-year profit drop in nearly two years.
However, the company reiterated its target for an adjusted profit for the full year of more than $2.7 billion euros, with CFO Philippe Capron projecting about $2.8 billion euros.
Vivendi's third-quarter adjusted profit, which excludes one-time items, decreased 1.4% to 721 million euros ($1.1 billion), slightly below expectations. Profit from equity affiliates, including NBC Uni, fell from 90 million euros a year ago to 76 million euros ($111 million).
Net income for the quarter fell from 1.56 billion euros a year ago to 578 million euros ($846.7 million), which included a big gain from an asset sale.
Vivendi's third-quarter revenue rose 10.9% to 5.4 billion euros ($7.9 billion), driven by recent acquisitions and strength at the firm's video games unit.
For the first nine months of 2007, revenue rose 7.9%, or 9.4% assuming constant currencies, to 15.6 billion euros ($22.9 billion), with adjusted profit up 6.5% to nearly 2.3 billion euros ($3.3 billion).
Universal Music saw its third-quarter profit decline despite a 6.8% revenue jump to 1.2 billion euros ($1.7 billion) thanks to the purchase of BMG Music Publishing Group. However, earnings before interest, taxes and amortization fell 16.7% to 115 million euros ($168.5 million).
Vivendi said digital music sales for the first nine months of the year amounted to 488 million euros ($715 million), up 47%. This amounted to 15% of total revenue, up from 11% in the same period last year. Best-selling albums came from artists Nelly Furtado and 50 Cent.
Vivendi cited "a difficult recorded music market, unfavorable currency movements and an adverse sales mix offset growth in music publishing."
Meanwhile, pay TV arm Canal Plus reported a third-quarter profit improvement of 39.9% to 207 million euros ($303.3 million), helped by the acquisition of TPS. Revenue rose 22.5% to 1.1 billion euros ($1.6 billion).
Vivendi Games, whose hot game "World of Warcraft" continues to sell briskly, brought in a 70.8% profit gain to 41 million euros ($60 million) on an 18.7% revenue jump to 216 million euros ($316.5 million).