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Live Nation Entertainment (LYV), a business centered on music concerts, one that counts Madonna and U2 among its portfolio of artists, promoted its fourth-quarter numbers earlier in the week. After browsing the data, and considering comments on guidance, I'm not sure I would want to buy the stock, even after seeing that it closed on Friday at a 52-week high.
According to BusinessWeek, Live Nation booked an operating loss of $64 million during the three-month period (adjusted operating income was positive, however). Sales went down well over 4%. Free cash flow for the full year, though, as detailed in a table right at the beginning of the press release, came in at nearly $59 million. That table also provides financial information for Ticketmaster, which recently merged with Live Nation.
I can't say I was overwhelmingly impressed by all the figures. Management is obviously looking forward to the theoretical beneficial effects of the addition of the Ticketmaster business.
But let's check out a news item on the subject. A Reuters report on the outlook for the upcoming fiscal year isn't heartening. I certainly don't see any mention of rampant acceleration in the fundamentals; instead, things are expected to be rather quiet for the business.
Plus, there's another element to the stock that should be kept in mind. The Wall Street Journal (subscription required) pointed out that some of the strength in the shares could be attributed to the dynamics of a tender offer that was made by Liberty Media Corp. (LCAPA) for over 34 million shares of Live Nation.
I know others might think differently, believing that Live Nation is a solid long-term idea, but given the questionable growth prospects, at least for the short term, as well as the issue of Liberty Media's involvement (investing solely based on that information isn't for me), my inclination at this juncture is to simply stay away and search for other opportunities. I'll leave it for those braver than I to trade the technical aspect.
Disclosure: I don't own any company mentioned; positions can change without notice.
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