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Vivendi keeps 2008 outlook, no need for cash call

PARIS (Reuters) - Vivendi VIV.PA, armed with a fresh contract with The Rolling Stones and its new Activision Blizzard gaming venture, kept its 2008 profit goal as it posted a rise in second-quarter underlying earnings.

The owner of Universal Music Group, the world’s biggest record company, and France’s second biggest mobile operator, SFR, said it could fund recent deals without a rights issue and no acquisitions were pending.

Those deals include buying SFR buying fixed-line operator Neuf Cegetel and the formation of video games giant Activision Blizzard ATVID.O, which brought together its World of Warcraft online role-playing game with partner Activision Inc's best-selling "Guitar Hero" franchise.

“We used less cash than expected to make our acquisitions. We can continue Vivendi’s expansion with the current balance sheet structure without tapping the market,” Chief Executive Jean-Bernard Levy told a conference call.

Levy had said in a newspaper interview in April that the group might need between 1 billion and 2 billion euros.

He told analysts on Monday that Vivendi was not eyeing any major acquisitions “in the next months”.

The company, whose best-selling artists include British soul singer Amy Winehouse, said it still expected 2008 profit growth similar to the 8 percent of 2007 on a like-for-like basis.

It said second-quarter group earnings before interest, tax and amortization (EBITA) rose 3.2 percent to 1.36 billion euros ($2 billion), slightly short of an average forecast of 1.39 billion from a Reuters poll of seven analysts.

Vivendi said its mobile phone unit SFR expected cash synergies from its merger with Neuf Cegetel of 75 million to 100 million euros in 2009, 175 million to 200 million in 2010 and 250 million to 300 million per year from 2011.

It raised its forecast for synergies from the Activision Blizzard venture to between $100 million and $150 million, up from a December 2007 forecast of $50-$100 million.

Vivendi shares were off 0.15 percent at 26.40 euros by 1030 GMT while European media stocks .SXMP were down 0.38 percent.

HIGHER COSTS

For the first half, EBITA declined 1.1 percent to 2.57 billion euros as strong performance by Universal Music and pay-TV unit Canal Plus were offset by restructuring costs at SFR and higher marketing costs at its video games division.

Universal Music, which inked an exclusive, long-term worldwide agreement with the Rolling Stones in July, posted a 17.7 percent rise in EBITA to 259 million euros.

It increased market share in the United States and Japan, and saw growth in digital sales and contributions from its acquisitions of BMG Publishing and Sanctuary.

Canal Plus’ EBITA rose 16.2 percent while the games division saw EBITA fall 22.7 percent to 92 million euros, partly because the year-before period had been bolstered by the successful release of “World of Warcraft: The Burning Crusade”.

Vivendi merged the games division with Activision in July, taking a 54 percent stake.

Levy said that including Neuf Cegetel and Activision Blizzard, the group’s 2008 adjusted net profit would be below net profit on a like-for-like basis due to restructuring costs, which he did not detail.

Vivendi plans to maintain in 2009 a dividend distribution rate of at least 50 percent of adjusted net income on a like for like basis.

Editing by Jason Neely

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