Article from digitalmusicnews.com:
Wall Street Loves a Layoff: Post-Rhino, Pali Says 'Buy' WMG...
http://www.digitalmusicnews.com/stories/092509pali
27 September 2009
Wall Street Loves a Layoff: Post-Rhino, Pali Says 'Buy' WMG...
Chop some headcount, and Wall Street gives you a pat on the back. After eliminating nearly 40 from its Rhino unit, Pali Research analyst Richard Greenfield has now reiterated a 'buy' rating on Warner Music Group (WMG). In an investor send shortly after noon on Friday, Greenfield praised Warner for "ability to eliminate pockets of costs even after multiple years of cost-cutting," while "inching closer to the point where digital will finally become the majority of their sales".
But the Rhino reduction amounts to less than one-percent of the total WMG headcount, according SEC numbers cited by Greenfield. Still, the symbolic nature of the pare-down was enough to impress this once-salty analyst.
The rest of the math is also suspect. Greenfield cited a 17 percent, year-over-year album sales decline in September as evidence that Warner is on the upswing. That decline sounds horrific, except when compared to a 22 percent, year-over-year decline during the second quarter. In Friday trading, shares of WMG slipped 3.27 percent to $5.33, after flirting with $6 earlier this week.
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