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EMI issues another warning
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February 5, 2002: 4:36 a.m. ET
Music giant expects pretax profit of about £150 million, below forecasts
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LONDON (CNN) - Britain's EMI Group, which paid $28 million to dump pop diva Mariah Carey, on Tuesday issued its second profit warning in six months.
EMI, like its rivals Warner Music, BMG, Sony Music and Universal, is suffering from a slowdown in consumer spending as the economic climate deteriorates. CD replacement sales are waning as music lovers opt for new mediums, like MP3, mini disc players and free music on the Net.
London-based EMI, the world's third biggest music company, said profit before tax and one-time costs for the year ending March 31 is expected to be about £150 million ($214 million). Analysts had estimated a profit of between £160 million and £207 million, said EMI.
EMI has severed contracts with a number of high profile pop artists, including Maria Carey and David Bowie, as it moves to cut costs and stem a decline in profits as music sales in Asia and Latin American wane.
Its stock plunged 7.1 percent to 303 pence in early trading on Tuesday. Its stock has fallen more than 40 percent over the last 12 month after two planned mergers with Warner Music and BMG were scuppered by anti-competition concerns.
The European Union was unwilling to see competition in the industry reduced from five players to just four.
Alain Levy, the new boss of EMI's recorded music business, said while missing its target was not good news, the key for EMI was how the group shapes up for the future.
"We are in the middle of a major redesign of EMI Recorded Music which will result in a reduction in our cost base, but will also make us more efficient and more competitive in order to drive growth," said Levy.
EMI, with artists Radiohead and Janet Jackson on its roster, warned last September that full-year profits would dive 20 percent. The company also announced the appointment of Roger Faxon, previously chief financial officer of EMI Music Publishing, as group chief financial officer. 
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