Vivendi Hits Estimates but Few Cheer

Gallic charm didn't seem to be working for Vivendi Universal (V Quote) on Tuesday.

The Gauloises-smoking, beret-wearing entertainment and communications conglomerate met analysts' expectations for 2001 operational results, year-end debt levels and 2002 projections. But the news did little to reverse the stock's 25% slide this year.

Confidence in the company was only weakly bolstered by CEO Jean-Marie Messier's release of a document designed to counter what a simultaneous translator rendered as a "hodgepodge of rumors" concerning the company's accounting policies and practices. Vivendi Universal, said Messier, doesn't want hedge funds making money off the company's shareholders by circulating "base canards" in the market.

On Tuesday afternoon, Vivendi Universal's shares were trading at $41.18, down 51 cents for the day.

Vivendi -- which owns the Universal's movie and music operations, the European entertainment business Canal+ and telecom firms, among other businesses -- said that the bottom-line yardstick of earnings before interest, taxes, depreciation and amortization amounted to 5 billion euros for media and communications operations this year, up 34% from pro forma figures for 2000, in line with analysts' expectations.

Under French generally accepted accounting principles, the company reported a net loss of 13.6 billion euros for 2001, compared to a 2.3 billion euro profit in 2000. The 2001 figure takes into account not only the company's majority-owned environmental services division, but also a 12.6 billion euro charge to write down goodwill in acquired assets. Vivendi, which plans to switch its financial reporting to correspond with U.S. GAAP, plans to take a similar charge on its U.S. books in the first quarter of the year, in line with the widespread implementation of the FASB 142 directive.

Cafe Society French media giant in decline

Vivendi Universal already reported 2001 revenue last month, tallying 58.2 million euros in pro forma revenue, up 10% from 2000 pro forma figures.

As of Dec. 31, Vivendi says its media and communications operations had 19.1 billion euros in debt, using U.S. GAAP, in line with analysts' expectations. Addressing the market's concerns about hidden debt at Vivendi Universal and elsewhere, Vivendi says, "There are no off balance sheet loans that have not been disclosed or any such items that would create accounting benefits." The company says its goal is to sustain the group's current triple-B credit rating, requiring it to keep its debt down to 3 times EBITDA or less. Vivendi says it hopes to bring that debt ratio down to 2.5 times EBITDA by midyear.

Reminding analysts that the company didn't have to restate forecasts for 2001, Messier said that the media and communications operations are forecasting 10% organic revenue growth for 2002 and EBITDA of close to 6 billion euros, excluding the company's impending acquisition of USA Networks' (USAI Quote) entertainment assets. Analysts had been expecting the 20% ebitda growth forecast.

In yet another example of the company's self-described financial conservatism, Messier said that the company wasn't assuming any significant economic recovery in the U.S., contrary to the upbeat mood of recent news from the U.S. Citing results that are very good one week and very bad the next, Messier said, "We're really still going up and down a lot."