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Earnings Roundup

Warner Music Group reports surprise loss despite strong lineup

November 25, 2009

Warner Music Group Corp. posted an unexpected loss in its fiscal fourth quarter as severance costs weighed on results despite a strong slate of music releases from artists including Jay-Z and Madonna.

The loss of $18 million, or 12 cents a share, contrasted with profit of $6 million, or 4 cents, a year earlier. The quarter included $14 million in severance costs as the company shifted resources from promoting CDs to generating revenue from digital music.

Revenue rose nearly 1%, to $861 million, the first revenue gain since the fourth quarter of 2008.

Analysts on average expected Warner Music to post a profit of 5 cents a share on revenue of $820.3 million, according to Thomson Reuters.

Warner Music shares closed down 86 cents, or 12.2%, at $6.20 after falling as low as $4.44 earlier in the day.

TIVO INC.

Subscriber drain leads to loss

TiVo Inc., the pioneer of digital video recorders, reported a $6.67-million third-quarter loss Tuesday as subscribers continued to drop the service.

The loss of 6 cents a share compares with profit of $100.6 million, or 98 cents, a year ago from an award in patent litigation, Alviso, Calif.-based TiVo said. Sales slid 12% to $56.9 million, topping the $53.1-million average estimate of analysts in a Bloomberg survey.

The company is trying to reverse subscriber losses by making its service more widely available on pay-TV systems, including Comcast Corp. TiVo is suing Dish Network Corp., EchoStar Corp., AT&T Inc. and Verizon Communications Inc. for allegedly violating its DVR patents. Total subscribers fell 21% to 2.74 million in the period ended Oct. 31.

TiVo shares rose 2 cents to $10.99 in extended trading. The shares added 24 cents to $10.97 at the close of regular trading and have gained 53% this year.

For the fourth quarter, TiVo projects service and technology revenue of $43 million to $45 million and a net loss of $13 million to $15 million.

TiVo said Tuesday that it would supply Mountain View, Calif.-based Google Inc. with viewer data for the Internet company's TV ad sales unit. Terms weren't disclosed.

The company also said it will develop a TV and broadband interface for Virgin Media Inc.'s new high-definition set-top boxes. The accord will give TiVo access to 4 million subscribers and recurring subscription fees, Chief Executive Tom Rogers said. Terms weren't disclosed.

BARNES & NOBLE BORDERS GROUP

Bookstores see difficult holiday

Barnes & Noble Inc. and Borders Group Inc., the nation's two largest brick-and-mortar book sellers, both posted quarterly losses and forecast a difficult holiday season, saying competition from discount chains and online retailers was stiffening.

Barnes & Noble, the larger of the two, also cut its forecast for annual profit, and shares of both retailers fell.

Even with an online presence, traditional bookstores have had a rough time facing off against online sellers like Amazon.com as well as discount outlets such as Wal-Mart Stores and Target and coping with consumers' reducing discretionary purchases amid tough economic times.

Barnes & Noble, which operates 775 stores, reported a fiscal second-quarter loss of 43 cents a share.

Excluding costs related to buying back its 636-store college bookstore chain from its chairman in August, it lost 30 cents per share, matching analyst forecasts.

Sales for the quarter ended Oct. 31 rose 4% to $1.16 billion -- though the increase was due to revenue from the college bookstores. Excluding that, Barnes & Noble sales fell 2% to $1.09 billion.

The company, based in New York, lowered its yearly forecast as the costs of producing its new electronic reader, the Nook, rose and holiday sales seemed off to a weak start.

Shares closed Tuesday at $22.25, down $1.27, or 5.4%.

Borders Group lost $38.5 million, or 64 cents a share, less than a year ago, but its third straight quarterly loss. Revenue for the three months that ended Oct. 31 dropped 13% to $602.5 million.

In an effort to improve its finances, Borders, based in Ann Arbor, Mich., has cut jobs, closed stores and chosen new leaders. It also has shifted its focus from less profitable categories like music and toward children's books, toys, stationery and its cafe.

But it has been slower than Barnes & Noble to close its lower-margin small-format stores and expand its e-commerce business.

Borders shares fell 27 cents, or 13.4%, to close Tuesday at $1.74.

-- times wire reports

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