Shakout at EMI

With a disappointing holiday quarter, EMI is undertaking a restructuring with two of their top executives, David Munns and Alain Levy leaving, an earnings warning and the announcement of upcoming layoffs, mostly in the recorded music part of the business.  Per paidcontent.org, Eric Nicoli, the CEO, stated that they need to strengthen digital sales.  While it will be painful for the people that get laid off, this restructuring will serve EMI well if it can and invest resources away from declining areas (CD/physical goods) and into growth areas (digital), which is what companies with antiquated business models undergoing transformation must do to survive.  The recent announcement no doubt has a lot of private equity associates burning the midnight oil working up models on doing to EMI what the private equity shops did with Warner Music Group, which was to buy it on the cheap, put in new management at the top, streamline and then take it public.  EMI, with its strong catalog and publishing cash cows, must be all the more attractive.