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EMI, authoring unit bracing for layoffs

Shares in EMI Group plc plunged Wednesday after the company issued its second profits warning in as many months, blaming the below expectations trading on steep declines in the North American market for CDs.

The London-based music company, whose artist roster includes Robbie Williams, Norah Jones and the back-catalog rights to The Beatles, said in a statement that it expects revenues from its recorded music unit to decline by around 15% on a constant currency basis, compared with the same period a year earlier.

EMI blamed the warning on "the continued and accelerating deterioration in market conditions in North America." "This unprecedented level of market decline has led to an exceptionally high level of product returns," EMI added, noting that sales were lower as a result and the "negative impact on gross margin has been higher than normal."

All group subsidiaries are suffering hardship as a result, with total redundancies worldwide likely to run into “four figures”, according to senior figures at EMI-owned Abbey Road Interactive, who are looking for new positions.

Last year, EMI held merger talks with its U.S. counterpart Warner Music Group, whose artists include Madonna and the Red Hot Chilli Peppers.

Deal talks were scuppered after a European court ruling on a previous record industry merger, between the music units of Sony and Bertlesmann AG, raised competition issues which could threaten any further music industry consolidation.

Story filed 18.02.07

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