Sony BMG Lost $42M Last Quarter

Sales at Sony BMG decreased 6% over the previous year "due to the continue decline in the physical music market worldwide not being fully offset by growth in digital product sales" according to Sony's latest earnings report.  The division lost $42 million before taxes last quarter alone compared to a profit of  $31 million in the same quarter of the previous fiscal year.   Best selling releases during the quarter included Usher's, Here I Stand, Leona Lewis' Spirit and Neil Diamond's Home Before Dark.

The decline left analysts scrambling to explain why Sony would still be in serious talks to purchase a controlling interest in the partnership from Bertlesmann. Does Sony really see future profits in recorded music or does it want to gut the operation to cut its losses more quickly?