Vivendi Universal Beats Forecasts

Franco-American media group Vivendi Universal responded to critics with stronger-than-expected 2001 revenues on Monday, sending its shares up three percent after a weeks-long battle to prop up confidence.

The world's second-largest media group posted total sales of $50.39 billion (57.4 billion euros) for the first full year following its merger with Seagram and Canal Plus which transformed it into a global media player -- about a billion euros higher than forecast.

But the complexity of Vivendi's post-merger figures and the timing of the release, for which investors were unprepared, only underscored market nerves about the difficulties of keeping keeping tabs on Vivendi's rapid overhaul, analysts said.

Vivendi's sales contrast with actual 2000 revenues of 41.58 billion euros, but on a pro forma basis sales came in at 58.19 billion euros compared with 53.051 billion, the group said.

Proforma media and communications revenues grew nine percent to 28.9 billion euros, Vivendi said, adding that once its purchase of Universal Film was stripped out the growth was 10 percent, matching management estimates given 12 months ago.

"The numbers outperformed our estimates by two percent, which is obviously positive," said JP Morgan media analyst Mark Harrington.

"Vivendi is one of the few companies in the global media sector which has not issued a revenue or EBITDA (gross operating profit) warning, so it demonstrates the structural growth of the company relative to its global media peers," he added.

Dresdner Kleinwort Wasserstein said it was starting coverage of Vivendi with a "buy" recommendation and a target of 60 euros.


Vivendi's revenues helped to lift the Paris stock market on a day when media-to-missiles group Lagardere also impressed with higher than expected 2001 sale figures.

By 1200 GMT, Vivendi, which has fallen 24 percent this year, was up 2.9 percent at 48.2 euros in a broadly firmer market that pushed the blue-chip CAC40 index up 1.4 percent.

Lagardere, which publishes the racy news magazine Paris Match, saw its shares rise as much as 4.7 percent to 44.7 euros after reporting 2001 total sales of 13.295 billion.

"Our 2001 results give us confidence that we can achieve our growth targets again in 2002," Vivendi said in a statement, adding it targeted 2002 revenue growth of "at least 10 percent."

Investors had been waiting for the 2001 sales figures as the first concrete evidence on how Vivendi was coping with the worldwide media downturn, which accelerated after September 11.

Revenues came in above the Multex consensus forecast of 56.246 billion euros, according to Reuters 3000 Xtra data.

Its music sales are outperforming the rest of the industry, analysts said, even though revenues from Vivendi's catalogue of crooners to rappers dipped just under one percent in 2001.

Vivendi's share price has been hammered since the start of the year by a perceived stock overhang and a spate of negative rumours that CEO Jean-Marie Messier knocked down as "unfair" in an open letter to worldwide staff last week.

But despite positive reaction to the sales figures, analysts remained unsure whether the market was ready to take a less jaded view on Vivendi, preferring to wait for its full results.

"The statement Messier made at the end of last week, if anything, made the market more nervous," said one analyst.

"The fact that he had to say it and its nervous tone suggest it was not necessary to say it. They also came out with sales numbers earlier than anticipated and that's not effective."

Vivendi, once a pure utility company and now the owner of prize media assets including Universal Studios, has been struggling to find the right tone as financial communications become increasingly challenging in the wake of the Enron saga.

"The figures are difficult to understand because they lack clarity between proforma and published data," another analyst said. "TV and film sales look very good and the rest is in line, overall," the analyst added, asking not to be named.

Vivendi, which is moving towards U.S. GAAP accounting standards, is due to file its full results on March 5.