EMI Group Warns of 42% Income Drop

EMI Group shareholders blanched Tuesday when the flagging British music giant announced its second profit warning in four months, predicting a 42% plunge in income for its fiscal year ending March 31.

In London, shares of EMI fell 6% Tuesday--the biggest decline since Sept. 25, when shares plummeted 35% after EMI said its full-year pretax profit would fall by about 20%.

On Tuesday, EMI said its pretax profit will shrink to an estimated $214 million--down from $372 million a year ago. EMI blamed the shortfall on poor sales in its record division, which included duds by Mariah Carey and Lenny Kravitz.

Tuesday’s profit warning came as EMI replaced its Chief Financial Officer Tony Bates--the latest in a series of management oustings at the company that releases music by such acts as Sparklehorse, Coldplay, Janet Jackson and the Beatles.

Bates, the architect behind EMI’s Internet investment strategy, will be replaced by company veteran Roger C. Faxon. EMI also appointed former PolyGram executive Stuart Ellis as CFO of EMI’s Recorded Music division.

Tuesday’s downturn is the latest in a string of financial setbacks for EMI. The British music group decided to restructure its American operations Friday, elbowing out Virgin music executives Ray Cooper and Ashley Newton barely a week after dumping pop star Mariah Carey. These moves follow the November firings of Virgin head Nancy Berry and her former husband and EMI boss, Ken Berry.