The Empty Space Left Behind By The Mighty TVXQ Is Too Big To Fill… SM’s Performance ‘Plummets’


It has been found that the stocks of the listed entertainment management enterprise SM did worse in the first quarter of this year than last year with a sudden 6~8% drop.
Much attention has been drawn to this issue as some are speculating that this drop in SM’s business showings since last year is a result of the reduced number of activities by ‘TVXQ’, who acted as SM’s cash cow.
TVXQ was most active in Japan in May~June, 2009, resulting in a higher amount of income. This income then went through a ‘division of income’ process (approximately 6 months) with the Japanese agency and was mostly added to the first quarter of last year, which explains why the results for this year’s first quarter are so low.
YoungWoong Jaejoong, Xiah Junsu and Micky Yoochun, no longer a part of the team after filing a lawsuit against their agency due to problems with their exclusive contract, have now formed the group ‘JYJ’ and those remaining, U-Know Yunho and Choikang Changmin, have decided to continue their activities under the name TVXQ.
SM released their quarterly report on the 16th which stated that the enterprise’s first quarter net sales, business profits and net profits were 19.3 billion Won, 2.3 billion Won and 1 billion Won respectively. Last year’s first quarter net sales, business profits and net profits were 22.6 billion Won, 10.2 billion Won and 8.5 billion Won respectively. Their business profits have reduced by 80% in a matter of one year.
Analyst Lee Sang Hyun of Hi Investment Bonds said, “In the case of SM, an enterprise in the entertainment management industry, there is no need for ‘an alternation of joy and grief’ in their quarterly results,” and “In the case of their Japanese profits, which make up the largest portion of the enterprise’s yearly sales, the profit from the sales of albums and concerts are taken in by SM after an estimated six-month delay according to their contract with their Japanese counterpart.”
He continued to say, “It is true that SM’s first quarter results have significantly reduced relative to last year due to the fact that the profits from TVXQ’s activities two years ago contributed to last year’s first quarter results,” and “But Girls’ Generation have released their ‘Mr. Taxi’ album last month and are scheduled to perform in four cities while SHINee are experiencing high popularity and interest as well, meaning that we can expect a visible improvement in the near future.”
SHINee’s ‘Replay’ album, set to release on June 22nd in Japan, has already become the most reserved album on online sites such as HMV and Tower Records.
The analyst also added, “Of the 10 billion Won that SM earned in net profits in the first quarter of 2010, approximately 8 billion Won came from net profits earned by TVXQ which shows that Japanese sales have a great impact on SM’s net profits,” and “As the influence of K-POP strengthens in Japan, Girls’ Generation has begun their activities in Japan, meaning that we can expect a visible improvement in the near future.”
He also said, “The second quarter will be better than the first quarter, and the second half of the year will see an increase in overseas royalties.”
Source: [hankyung]
Translated & Shared by: dongbangdata.net