PARIS--Vivendi SA (VIV.FR) executives said Thursday they are not
in a hurry to sell off assets as part of an ongoing strategic
review, and aren't contemplating breaking up the company, as
better-than-expected second-quarter results eased investor pressure
to pursue quick deals.
Net income at the ailing media and telecommunications giant
plunged 44% to EUR463 million for the quarter, from EUR824 million
a year earlier, dragged down by shrinking profitability at French
phone unit SFR, which has had to slash prices since the January
launch of a new mobile phone operator in France. Increased taxes
and delayed accounting for videogame sales Activision Blizzard
(ATVI) were also a factor.
The company's adjusted earnings before interest and tax, a
closely watched figure for Vivendi, fell 21% on year to EUR1.32
billion in the quarter, from EUR1.66 billion. But that was better
than the 23% analysts had expected, according to Factset,
potentially easing pressure on the company to quickly pursue
deals.
Financial Chief Philippe Capron said the company isn't
considering a "straight breakup" of its assets as part of an
ongoing strategic review of the conglomerate's disparate media and
telecommunications assets.
"Clearly a breakup of the company would lead to very, very great
difficulties in terms of the apportionment of the debt," Mr. Capron
said on a conference call to discuss second-quarter results with
financial analysts.
Vivendi's shares were up more than 4.3% in early trading
Thursday to EUR15.76 at 0734 GMT.
Vivendi has been under the gun since the beginning of March,
when a profit warning at SFR less than a year after Vivendi spent
EUR7.8 billion to buy out partner Vodafone PLC prompted its stock
to plummet. After years of pushing the idea that the company could
find synergies between its broad range of businesses, Vivendi's
board began exploring asset sales and in late June pushed out Chief
Executive Jean-Bernard Levy.
Overall revenue at Vivendi for the second quarter fell 1.5% to
EUR6.97 billion, compared with EUR7.07 billion a year earlier.
Revenue at SFR, which represented 42% of revenue in 2011, fell
7.5% to EUR2.83 billion. While the company said it is now seeing a
net increase in its number of mobile-phone customers, a price war
with ultra-low-cost cellular phone provider Iliad SA (ILD.FR) has
forced SFR and competitors to lower prices on their phone
plans.
"We are not losing customers anymore. But of course we are
suffering the price reset," Mr. Capron said.
The company also said it is planning to achieve EUR500 million
in annual cost-savings at SFR by the end of 2014.
Activision-Blizzard (ATVI) games unit rose 5.2% to EUR837
million, in part because of the positive impact of a weakened euro.
But the unit's exchange-adjusted revenue was down, in part because
of delayed accounting for sales of games such as Diablo III, which
the company says will boost results later this year.
Vivendi's music arm Universal Music Group saw revenue of EUR961
million, down 7.9% from a year earlier, but the company managed
roughly flat operating profit in constant currencies compared with
a year earlier.
-Write to Sam Schechner at sam.schechner@wsj.com
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