Emi Group Plc

EMI Group PLC Case

MBA 614: Financial Management Instructor: Anas Aboulamer

June 23rd, 2014

Simon Foucher – #7107722

Geneviève Lavigueur – #6769780

Lukas Stoltz – #6712274

Myriam Lévesque – #4728033

René Bérard – #

Jonathan Yeh– #5553024

Contents

Introduction 3

Background Analysis 4

Changing music market 4

EMI losing market share to competition 5

Takeover risk 6

Internal Analysis 7

EMI Strengths 7

Weaknesses 8

Financial Analysis 9

Recommendation 11

Introduction

EMI group is a British music recording and publishing company that was founded in 1931. It is currently the world’s largest independent music company. Since the mainstream introduction of digital music and specifically music stored in a MP3 file format EMI has been struggling to keep revenues up and have seen a steady decrease in its top line over the last few years. This year is looking particularly bleak for the company as it has seen a bigger decline in revenue compared to previous years. The company’s stock price has fallen dramatically in the last few years and investor confidence has been shaken. Historically (since 2002) the company has been paying a fixed divided to shareholders and has already paid part of this divided for the current year. The decision for EMI now is do they pay the dividend as per the last few years or use the cash in other projects.

Background Analysis

Changing music market

The digital revolution is said to have started when Apple launched the iTunes Music Store and the iPod, which brought user friendly digital downloading and mobile enjoyment to the US, the world’s largest music market. Interestingly, iTunes sold it’s one billionth download in Feb 2006 and in the first quarter of 2007 Apple sold 21 million iPods, up from 15 million units in 2006 Q1 and 5 million units in 2005 Q1. Approximately $2 billion in music sales was attributed...