EMI lost a whopping $1.2 billion in the financial year that ended March 31st dwarfing the prior year’s $455 million river of red. Revenue declined to $2.3 billion from $2.8 billion.
Some losses stem from restructuring after Terra Firma's takeover. But EMI underperformed its competitors using most benchmarks. CD sales at EMI fell 45% from 2005 to 2007 compared to an average market decline of 19%. EMI projected 51% revenue growth in digital saled and delivered 29% growth despite being the first to drop DRM.
“There should be no false expectations,” the report stated. “EMI cannot be turned around overnight.” It's hard to see how EMI can A&R its way out of this mess and survive while Hands & Co. restructure, but the company may have no choice. In normal times consoldation with WMG would now be rumored. But a gloomy global economy looms making it hard to imagine any investor saving Terra Firma by scooping up EMI's assets even at fire sale prices.
