Warner Music Shares Drop, With a Bullet

New York, NY (TheStreet) -- Warner Music Group's(WMG Quote)surprise earnings loss has sent shockwaves through the investment community.

Shares of one of the nation's largest record companies have been teetering in negative territory today.

Warner Music shares stumbled 8.2% in early afternoon trading to arrive at $5.62 a share on Wednesday.

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Severance costs for Warner Music in the fourth quarter eclipsed strong music releases from artists including Jay-Z and Madonna and an increase in U.S. market share, by a quarter of a percentage point, despite a surge in sales of Michael Jackson albums, which are distributed by Sony.

Warner Music reported a fourth-quarter loss of $18 million or 12 cents per share, compared with net income of $6 million or 4 cents per share a year ago.

The earnings miss and recent run up in Warner Music shares has prompted one securities analyst to cut his rating on the company.

"We believe the stock's appreciation of recent months has raised the operational bar for the company, and we're not sure recent results meet this elevated standard," said Chris White, a Wedbush Securities analyst.