The Investment Column: No value in the EMI demerger
Wednesday 26 November 1997
Management claim both businesses have been hit by unforeseen circumstances since they were separated. They have a point. Shares in the combined group were ramped up to ludicrous levels ahead of the demerger on the back of speculation that EMI would be snapped up by a larger rival such as Seagram or Disney. That has since evaporated while EMI's performance has been hit by strong currency and a slowing down in the growth of the worldwide music business.
At Thorn the business has been savaged by the rapid decline in the UK rentals market, increased US competition and litigation over credit practices.
At EMI currency factors knocked pounds 14m off operating profits while global music sales are now growing at just 1-2 per cent a year - compared to double digit rises a few years ago. Economic turbulence in the Far East is a key worry. The region accounts for 20 per cent of group sales.
A bid is still possible though with a people business it would need to be agreed. On downgraded full year forecasts of pounds 343m the shares are 18 times forward earnings. They are a hold. At Thorn, the long-overdue re- vamp of the business may finally deliver value to shareholders. The shares have now fallen so far that the downside is starting to look limited.
- 1 Scottish independence: Ireland since 1919 is a lesson for Scotland in what a Yes vote means
- 2 Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
- 3 Vogue under fire for 'Big Booty' article
- 4 Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
- 5 Kanye West stops concert after two fans don't stand up - doesn't realise one is in wheelchair and the other disabled
Thailand deaths: Pair's bloodied bodies found naked on Koh Tao beach
Jihadi John': MI5 may have identified Isis militant who killed David Haines but options limited
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: Police will be on high alert on Friday whatever the result
The wedding photo from Ground Zero: A shot in the dark
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
Portuguese academic says British are 'filthy, violent and drunk'
iJobs Money & Business
£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...
£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...