Media and telecoms conglomerate Vivendi Universal today said sales fell 12% in the second quarter, less than the market had forecast, as a swing to growth at its music unit and gains in its mobile-pho

Media and telecoms conglomerate Vivendi Universal today said sales fell 12% in the second quarter, less than the market had forecast, as a swing to growth at its music unit and gains in its mobile-phone business outpaced expectations.

Paris-based Vivendi has been undergoing a restructuring for two years to pay off the mountain of debt that accumulated during an acquisition spree that nearly crippled the company under its former chief executive.

Vivendi's shares gained €0.19, or less than 1%, to 20.94 in morning trading.

Total sales for the quarter, after taking into account changes in currency and divestitures, were €5.418 billion ($6.52 billion) against a consensus forecast of €5.215 billion ($6.28 billion) and €6.132 billion ($7.38 billion) a year earlier.

On a comparable basis, assuming constant currencies, sales increased 6% in the second quarter versus a year ago.

The decline in reported sales reflected lost contributions from a number of businesses, including Vivendi Universal Entertainment, the majority of which it sold in May to NBC, the media company owned by U.S.-based General Electric Co.

Sales at Universal Music group, the world's biggest seller of recorded music, rose 2% in the second quarter to €1.091 billion ($1.31 billion), an unexpected turnaround for an industry that has been pummeled by illegal online downloading of songs. Universal Music sales were flat in the first half assuming constant currency.

The music group's improvement shocked analysts the most, but they cautioned that the second quarter is typically one of the weakest seasons for the sector even though increased sales in the United States were seen as a key indicator.

"We have to wait until the third and fourth quarters to see if this is a sustainable trend," Bear Stearns analyst Mark Harrington said. "And although overall it's a good set of numbers, I think industry growth is the real driver as opposed to it being anything company-specific."

Sales at Vivendi's majority-owned SFR Cegetel mobile phone unit, France's second largest wireless operator, grew 12% to €2.055 billion ($2.47 billion), in part from the introduction of new products and services and a growing customer base.

Vivendi's games business performed the worst, with sales plummeting 44% in the quarter and 32% in the half, although the ailing unit accounts for only about 1% of the company's revenues.

At pay-TV unit Canal Plus, quarterly sales with constant currency grew 3% to €908 million ($1.09 billion) thanks to an increase in subscribers at the premium channel and advertising sales gains for the group.

--Reuters

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