EMI Turns Profit – A Look Inside

LONDON (Hypebot) – In a memo to his staff at EMI, Guy Hands announced that his turn around efforts are beginning to bear fruit. In the last quarter

  • Revenue in the record division is up 61%
  • Earnings doubled
  • Quarterly earnings before interest, tax, depreciation and amortization of $118.4M
    compared to a loss of $71.5Min the same period in '07.

    Seemingly impressive stuff, but its only part of the real story:

  • The Coldplay album had just been released; so its positive impact will be felt of the coming quarter or two
  • Many of the most expensive restructuring costs including executive buy-outs will not be reported until next quarter
  • EMI staffers say the savings came from lower marketing outlays to achieve similar sales. But is the model sustainable? When a product cuts ad budgets, the effects are not felt until months later when residual consumer interest fades.
  • Morale in many departments remains low
  • New signings (aka future sales) remain slim
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