Warner Music Group Corp, the world's fourth-largest record company, posted a narrower second-quarter loss than analysts estimated and said revenue rose 3.8 percent on sales of albums from Tim McGraw and James Blunt.
The net loss was US$7 million, or US$0.05 a share, compared with a profit of US$4 million a year earlier, when the company had a gain. Sales increased to US$796 million, New York-based Warner Music said in a statement on Friday.
British singer-songwriter Blunt, who sold 1 million albums in the US, and a surge in downloaded music helped lift revenue in the quarter ended March 31.
Chief executive officer Edgar Bronfman Jr on Thursday said Warner Music has room to grow on its own after the company last week rejected a US$4.23 billion offer from London-based EMI Group Plc.
"It was a very strong quarter," said Eric Handler, an analyst at Lehman Brothers Holdings Inc who rates the shares "equal weight."
"They had a great line-up in their new releases. The most impressive thing was digital revenue," Handler said.
Shares in Warner Music gained US$0.66, or 2.3 percent, to US$29.40, markin a record high, at 4:01pm in New York Stock Exchange composite trading on Friday. They have jumped 53 percent this year.
The loss was narrower than a US$0.17 estimate by Merrill Lynch & Co analyst Jessica Reif Cohen. Analysts on average predicted a loss of US$0.16 a share on sales of US$770.6 million, according to nine estimates in a Thomson Financial survey.
Earnings in the fiscal second quarter a year earlier were boosted by a US$39 million gain on warrants from former parent company Time Warner Inc.
Revenue from digital sales, which are more profitable than CD sales, more than doubled to US$90 million in the quarter and accounted for 11 percent of the total.
About 70 percent of downloads are in the US, Warner Music said.
Sales from the recorded music business gained 9 percent to US$676 million, while operating income before depreciation and amortization rose 13 percent to US$81 million.
Major sellers at the unit, run by Lyor Cohen, also included rappers T.I. and Juvenile, as well as Madonna and Sean Paul.
"Getting this business on track remains a priority," Bronfman said on a conference call, referring to the publishing unit.
Warner Music last Wednesday said EMI's offer of US$28.50 a share was "not in the best interests of our shareholders."
It was the third time since 2000 that the two companies, which are each half the size of leaders Universal Music Group and Sony BMG, failed to merge.
"Consolidation for consolidation's sake doesn't make a lot of sense," Bronfman told an audience on Thursday night in New York.
"Ours is not a business that requires scale economics," he said.