Vivendi (NYSE:V) is one of those complex behemoths of a firm that normally doesn't make it onto my radar since, as a lazy Fool, I prefer my companies small and simple. Still, those of us who engage in periodic stock-market schadenfreude should make it a point to check in with the subsequent turnaround stories. Vivendi's recent saga has been as exciting as anything its former Universal picture unit -- since sold to GE's (NYSE:GE) NBC -- could have imagined.
For a glimpse of the theatrics, peek here. The story is familiar: Local French water carrier makes her way in the world, climbing the social ladder to join the likes of Time Warner (NYSE TWX) or Disney (NYSE:DIS), clawing toward success through media acquisitions until, suddenly, it all falls apart. Cut to act two, where our heroine claws her way back to respectability. The pinnacle, where all is resolved in one last dramatic flourish? That's today, if you believe management.
For the second quarter, real revenues were down 13% to euro 5.4 billion, but that comparison is a bit unfair, considering how many operating units the firm has sold between the prior-year quarter and today. Operating income was up 6.6% for the quarter and 8.8% for the first half of the year, which is not too shabby given the above-mentioned divestitures. On a pro forma basis, operating income looks 39% better than the first half of last year.
This quarter, there were strong increases in operating income from many units, including a 53% gain at TV outfit Canal+ and 22% at telecom group SFR Cegetel. But, for the time being, it wasn't enough to put the firm in the black.
The bottom line shows a loss of euro 1.73, or $2.12 per share, because of heavy foreign exchange charges on the NBC-Universal deal. But again, things are more complex than they seem. Free cash flow actually comes in at euro 1.66 billion, or $2 billion, more than enough to begin paying off the massive debts and still have leftovers for the promised dividend.
Investors greeted the news with a big yawn, which implies that those in the know were already counting on these results. As is the case with many corporate corpse-raisings, those who have faith when things look their worst take the biggest share of the profits when things turn around.
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Seth Jayson still reads a bit of French, but he has no position in any company mentioned. View his Fool profile here.
