"Crazy" and "Dani California" certainly helped, but it was a $13 million legal settlement from file-sharing service Kazaa that boosted Warner Music group to a fourth-quarter profit today.

The label giant reported a profit of $12 million, or 8 cents per share, for the three months ended September 30 compared with a loss of $30 million, or 21 cents per share, for the same period a year ago. But the Kazaa settlement, which ended the P2P giant's lengthy legal standoff with the music industry, only served to prop up an otherwise weak quarter for the company. The company sustained a loss of 1 cent per share excluding the Kazaa payment.

Despite strong sales from Gnarls Barkley and Red Hot Chili Peppers, makers of the respective hit singles mentioned above, Warner saw revenue fall 6 percent during the quarter to $854 million from $905 million last year. Analysts surveyed by Thomson Financial expected a break-even performance in earnings per share on revenue of $893.9 million.

In a conference call this morning, Warner CEO Edgar Bronfman, Jr. downplayed the weak sales and continued to emphasize the role of digital sales in his company's bottom line.

"While the quarter was soft for us in terms of physical sales, on a worldwide basis for the year, gains in digital recorded music revenue more than offset declines in physical recorded music revenue," he said.

Warner said its digital revenues were $104 million, or 12.2 percent of total revenue.

Bronfman warned that the company's upcoming first quarter would face tough annual comparisons.

"However, regardless of any particular quarter comparison, we enter 2007 with a renewed energy for our ability to continue to generate value, continue to accelerate the digital transformation, and continue to innovate and attract creative executives, artists and song writers," he said.

For the full year, the company posted net income of $60 million, or 40 cents per share, versus a loss of $169 million, or $1.40 per share, last year. Revenue rose to $3.52 billion from $3.50 billion.

Warner shares fell 57 cents, or 2.3 percent, to $24.85 in early trading on the New York Stock Exchange.