CAN THE new Coldplay album shift EMI shares? What about the newone from Atomic Kitten? Or Phil Collins? Is EMI's autumn releaseschedule exciting enough to get the record label's shares back up thestock market charts?
They've all got to be monster hits, because EMI has promised towin market share from its bigger rivals this year. But even a decentchart performance might not be enough to save this historic companyfrom long-term decline.
Figures from the British Phonographic Industry this week suggestedEMI's home market, which has sometimes seemed resistant to thedownward global trend in recorded music sales, has hit the skids.Long-term, the growth of CD burners and internet downloads mean salesof recorded music are likely to fall substantially, as they have inthe US, particularly as broadband internet access becomes more widelyavailable.
EMI's fans say investors need to focus not on sales growth but onthe cost cuts Alain Levy, head of recorded music, is pushing through.These are not insubstantial, but restructuring costs money and theeffect on margins remains vague.
The worry is that the effect of cost cuts on profits will be mutedif sales are. Other companies, such as Sony, BMG and the marketleader Universal, which have greater market shares than EMI, arecertain to respond by spending more on developing new artists, andEMI knows it has to do the same.
Even if all goes to plan, EMI shares still look toppy for acompany with dim long-term prospects. Avoid.
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