Warner Music Group (NYSE:WMG) Estimates Slashed on "Challenging Environment"

Citing a challenging environment for the music industry, Needham & Company slashed their estimates on Warner Music Group (NYSE:WMG).

Needham said, "WMG is expected to report FY1Q11 (ended December 31, 2010) earnings in early to mid February, 2011. We are lowering our FY1Q11 estimates by 19% YoY to $747M, from $800M, and our FY2011E revenue estimates by 5% to $2.641B, from $2.782B, to reflect a challenging environment in the music industry. With declining physical sales showing little or no signs of reversal, we are lowering our estimates for the quarter and the year. Further reductions are possible and we will pay close attention to management comments on the earnings call. As a result of lowering our estimates for revenues, we are lowering our 1Q11 EPS estimate to a loss of $0.20, from our previous estimate of a loss of $0.11, and we are lowering our FY 2011 EPS estimates to a loss of $1.11, from our previous estimate of a loss of $0.84."

Needham & Company maintains a "Buy" rating on Warner Music Group, which closed Friday at $5.36, down $0.03, or 0.56 percent. Needham has a price target of $8.50 on them.