Warner Music shares drop on industry data

Warner Music Group Corp.'s shares dropped on Monday after an analyst said an industry decline in music sales seems to have accelerated in the first half of 2008.

The stock lost 25 cents, or 3.5 percent, to $6.84 on Monday. The shares have traded between $4.57 and $15.71 during the past 52 weeks.

Wedbush Morgan Securities analyst Chris White lowered his 12-month price target to $7 from $9. He did maintain his "Hold" rating on the stock.

White noted that total album sales, both physical and digital, have continued to decline in the first half of 2008, while digital album sales have increased at a slightly slower rate than recent quarters.

Nielsen SoundScan data shows that total album sales have dropped 11 percent in the first half of the year and physical CD sales are down more than 16 percent year-to-date.

White said CD sales have dropped as dedicated music stores have closed and big-box stores have reduced shelf space for music.

Nielsen said digital album sales have grown 34 percent in the first half of the year. White noted the jump in digital music sales is "impressive," but falls short of the growth rate reported by Warner Music in its last two quarters.

(This version CORRECTS 5th graf to say Neilsen SoundScan data show total album sales, not total music sales, declined 11 percent.)