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
