Bloomberg News

Vivendi Profit Beats Estimates on GVT, Activision Divisions

November 17, 2011

(Updates with CFO comment in final paragraph.)

Nov. 16 (Bloomberg) -- Vivendi SA, the owner of the world’s largest video-game and music companies, reported third-quarter profit that exceeded analysts’ estimates, helped by growth in its Activision Blizzard and GVT divisions.

Profit excluding one-time gains and costs reached 685 million euros ($923 million), the Paris-based company said in a statement today. That compared with the 555 million-euro average estimate of 13 analysts compiled by Bloomberg. Sales fell 1.6 percent to 6.78 billion euros, in line with estimates.

Chief Executive Officer Jean-Bernard Levy is orienting Vivendi more heavily toward the music and TV businesses, offsetting slowing growth at mobile-phone unit SFR. Last week Vivendi’s Universal Music Group agreed to pay 1.2 billion pounds ($1.9 billion) to acquire the recorded-music assets of EMI Group, home to artists including Coldplay and Katy Perry. Its Canal Plus pay-TV unit agreed this month to buy a stake in Poland’s TVN network.

“GVT was once again better than expected,” Charles Bedouelle, an analyst at Exane BNP Paribas, wrote in a note. “Activision Blizzard was much better than consensus expectations.”

Vivendi rose 5.6 percent to 16.34 euros in Paris trading, valuing the company at 20.4 billion euros. The stock has declined about 19 percent this year.

Activision Blizzard reported a 79 percent surge in earnings before interest, taxes and appreciation. GVT, which a provider of fixed-line broadband in Brazil, increased earnings by 58 percent during the quarter.


Vivendi today lowered its full-year forecast for adjusted net income by about 5 percent to “above” 2.85 billion euros, citing 350 million euros in additional taxes because of new French rules. Excluding taxes, Vivendi said it increased its projection for that measure by 200 million euros.

A cap on some deductions and changes to France’s consolidated global profit tax system increased Vivendi’s tax liabilities in the first nine months.

SFR, France’s second-largest mobile-phone operator, posted a 3.6 percent decline in third-quarter sales. The division, which generated about 45 percent of Vivendi’s revenue in the quarter, faces a new competitor next year when Iliad SA, the broadband provider founded by billionaire Xavier Niel, will become France’s fourth mobile-phone operator. Niel has pledged to drag down prices in France, where consumers pay more than those in other European countries.

Vivendi yesterday cut its stake in Activision Blizzard, the maker of video games including “Call of Duty” and “Guitar Hero,” to 60 percent. The share sale raised about $427 million, according to people familiar with the situation.

Despite the Activision sale, Vivendi’s recent deals have left “very little headroom on the balance sheet” for future acquisitions, Chief Financial Officer Philippe Capron said on a conference call today. In addition to EMI and TVN, Vivendi this year paid 7.95 billion euros to buy Vodafone Group Plc’s minority stake in SFR.

--Editors: Kenneth Wong, Simon Thiel.

To contact the reporter on this story: Matthew Campbell in Paris at

To contact the editor responsible for this story: Kenneth Wong in Berlin at

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