HITS Daily Double
Shares fell more than 6%, to $9.89, at 9:38 a.m. this morning ET, though the stock was back up to $10.18 by 12:15 p.m. ET. Whoever had August 7 in that widely discussed office pool can now collect their winnings.


Q3 Losses Widen As Stock Price Drops to $9.89
The other shoe dropped today, as Warner Music Group stock dipped into single digits this morning on news that its fiscal third-quarter loss widened as more people bought digital music rather than CDs.

Shares fell more than 6%, to $9.89, at the closing of the New York Stock Exchange in today's trading. Whoever had August 7 in that widely discussed office pool can now collect their winnings.

The loss for the quarter ended in June was $17 million, or 12 cents per share, versus a prior-year loss of $14 million, or 10 cents per share. Excluding nonrecurring items related to a corporate restructuring and settlement, the loss in the 2007 quarter was $29 million, or 20 cents per share.

Revenue declined 2% year over year to $804 million from $822 million. On a constant-currency basis, revenue fell 5%.

On average, analysts surveyed forecast a quarterly loss of 14 cents per share on revenue of $836 million.

The company said digital revenue increased to $119 million, or 15% of total revenue, in the quarter, up 29% from $92 million in the prior-year quarter and up 7% sequentially from $111 million in the second quarter of fiscal 2007.

Recorded music revenue fell 4%, while music publishing revenue rose 5%.

On Sunday, Citigroup analyst Jason Bazinet downgraded the stock to a sell rating, and advised investors to avoid a "falling knife."

The company recently made an unsuccessful bid to acquire EMI before Terra Firma’s acquisition of the record group. The news comes as the stock teeters on the edge of single digits, with several office pools within the company betting as to when that date will be.

There has also been discussion that Thomas H. Lee and company, the private equity firm that backed Edgar Bronfman Jr.'s acquisition of WMG, is getting antsy about the current upper management's ability to pull the music group out of its downward spiral.