Vivendi Stock Rises After Earnings Outperform

Vivendi-logo - H 2012

Analysts laud the company for buying itself more time to evaluate its strategy and possible asset sales, including sales of labels it purchased in its recent EMI deal.


LONDON - Vivendi's stock rose in early Wednesday trading after the French media and telecom conglomerate reported better-than-expected third-quarter results that analysts said will allow it to take its time with asset sales decisions.

As of 12:15 p.m. Paris time, the stock was up 4.8 percent at $24.91 (€15.71).

Based on its stronger-than-predicted quarterly results, Vivendi raised its full-year guidance for adjusted profit.

The results and updated guidance drew a thumbs-up from Sanford C. Bernstein analyst Claudio Aspesi. "Management appears comfortable with the cash situation," he wrote in a report on Wednesday. "This suggests there is relatively little pressure on debt. This is a positive, as it gives more room to time divestitures appropriately."

Some observers had previously expressed concern that Vivendi, which is in the process of reviewing its asset portfolio, may have to divest businesses at fire-sale prices. But management has continued to emphasize it would take its time to evaluate the best strategy and then hold out for strong price tags in deals that it feels make sense.

Vivendi owns Universal Music Group, which it is widely expected to hold on to, a majority stake in video game maker Activision Blizzard, French pay TV firm Canal+ and telecom businesses in France, Brazil and Morocco.

Jefferies & Co. analyst Will Smith said he expects the company to continue to manage its business to give it more time.

"We expect Vivendi to focus on cost cutting in the near term in order to avoid being forced to sell assets at distressed prices," he said Wednesday.

Vivendi management on an earnings call after its financial report late Wednesday said it is still evaluating its future plans for its role in the media and telecom fields. “First we’ll define a strategy, then we can think about possible asset sales,” CFO Philippe Capron said. “We are in the phase of validating and specifying our strategy.”

Meanwhile, following the recent acquisition of EMI Recorded Music, Universal Music Group said Tuesday it has started its auction of music labels it has agreed to divest. "The sale process of certain EMI recorded music assets is underway, and these divestments are generating robust interest," it said.

Twitter: @georgszalai