The naming of EMI's Eric Nicoli to take control of the company's music arm hit a bad note with analysts, who doubted that he is the right executive to revamp the world's third-largest music company.
Much of a delay in improving the company's fortunes, and he could be facing the music soon himself.
"If EMI is to remain independent, which it may not, it needs to find a heavyweight CEO to take responsibility for EMI recorded music. Nicoli should not retain the job," said Collins Stewart analyst Simon Wallis.
EMI on Friday issued a profit warning and announced its second restructuring in three years. Out went EMI Chief Executive Alain Levy and Vice-Chairman David Munns. Nicoli, who has been executive chairman, became group chief executive and took responsibility for running EMI Music.
Analysts and industry experts said Nicoli's expertise appears to be on the business side of EMI rather than in spotting new talent and managing artists.
Before he came to EMI seven years ago, Nicoli focused on food, with a stint at sweets group Rowntree Mackintosh and then almost 20 years at United Biscuits, eight of them as CEO.
Little musical background
"He doesn't particularly have a background in music. I think the risk on him is quite high, because he's put himself into the hot seat," said one analyst, who wished to remain anonymous.
While Nicoli was chairman, the industry looked to him to negotiate a merger, but EMI has failed to strike a deal.
"Having confidently rebuffed both a 310 pence bid from Warner Music and a private equity bid during the last six months, management entered Christmas expecting at least two 'blockbuster' albums," said Bridgewell Securities' Patrick Yau.
"This confidence was clearly misplaced, and both Levy and Munns have paid the price," he said.
Now as EMI works through its restructuring, the company will pin its hopes on new releases including a Norah Jones album due out soon.
London-based EMI has a strong line-up of UK talent. The Beatles, Robbie Williams, Gorillaz and Radiohead rank among its leading artists.
But according to Music Week data, only five of the top 40 UK Christmas sellers were from EMI, compared with 20 for Universal, 14 for BMG and just one for Warner Music.
Bridgewell's Yau describing EMI's release pipeline as "middling" as he cut his pretax profit forecast for the company to 112.8 million pounds from 160 million pounds.
The challenges facing EMI go deeper than a poor Christmas performance.
The latest figures from the International Federation of the Phonographic Industry show music sales across the industry fell 4 percent to $13.7 billion in the first half of 2006.
Some analysts say EMI relies too much on the UK market and lacks enough firepower in the United States, the world's biggest music market.
"The issue EMI has is scale" and breadth in its portfolio of artists, said Martin Talbot, editor of Music Week, which compiles data on the industry.
The world's biggest music company is Universal Music, which is owned by French media giant Vivendi. Behind it come the joint venture of Sony Music and Bertelsmann, then EMI and Warner Music Group.
Hopes of a deal between Warner and London-based EMI were quashed in June when a European court annulled approval of the 2004 merger of Sony Music and Bertelsmann's BMG.
Some analysts suggested Nicoli's appointment signalled that EMI was effectively putting itself up for sale.
"This makes them look vulnerable," said Richard Hitchcock at Numis Securities. Collins Stewart analysts suggested Nicoli himself might be tempted to lead a management buyout.
Source: China Daily/agencies