Warner Loses Over $100 Million In Market Capitalization
— Shares of Warner Music Group fell 9.79% to $5.62 on Tuesday, knocking off $94.5 million of the company’s market capitalization. Shares fell another 1.4% to $5.54 on Wednesday, reducing the market capitalization another $9.5 million for a total of $104 million.
In other words, over $100 million of shareholder value was just wiped out. (Market capitalization equals the number of shares outstanding times the share price. It is the market’s opinion on the value of a company.) Now, a 10% drop in share price doesn’t necessarily mean any big events are coming at Warner. In general, however, a lower share price makes it less expensive for shareholders to increase their ownership percentage and increase their voting rights. And a lower market capitalization makes a company less expensive to acquire (although a company’s debt also comes into play).
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On Tuesday morning the company reported disappointing earnings for the quarter ended December 31, 2010. Losses amounted to $18 million, or 12 cents per share, on revenue of $789 million. Analysts polled by Thomson Reuters forecast a loss of 19 cents per share on revenue of $798 million.
( Ars Technica)