Napster posts narrower loss
Services for mobile phones and PCs shrink earnings loss by 20 percent below expectations for online music seller.
By Reuters
Published: November 2, 2007, 6:33 AM PDT
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Napster on Thursday reported a narrower quarterly loss as revenue increased from new, mobile phone-based and existing personal computer-based services.
The digital music company said its fiscal second-quarter net loss was $5.1 million, or 12 cents per share, compared with a year-earlier net loss of $9 million, or 21 cents a share.
Revenue grew 24 percent to $31.6 million from $25.5 million a year ago.
Wall Street analysts had been expecting Napster to report a net loss of $6.4 million, or 15 cents a share on revenue of $30.5 million.
But Napster lost 20,000 subscribers during the quarter saying it had around 750,000 paid subscribers at the end of the period.
Napster provides an online music service that allows consumers to either download or stream songs via their personal computers and has recently started to expand the service so songs can be transferred to portable digital music players or mobile phones.
The company said it expects to see third-quarter revenue grow to around $33 million based on the continued uptake of its Napster To Go and mobile phone-based services.
Executives told Wall Street analysts on a conference call that the company’s move into mobile-based services would boost its business over the coming year.
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Last month Napster said it signed a deal with the largest U.S. wireless company, AT&T, to sell songs to mobile phones over the air.
“Creating alliances with key mobile partners has been paramount. The question now is how fast can we ramp (up),” said Napster Chief Executive Chris Gorog.
“As compatible devices roll out and simple executional issues are remedied we see it in our growth trajectory,” said Gorog.
Wall Street analysts on average expect Napster to post revenue of $33.6 million in the third quarter, according to a poll by Reuters’ Estimates.
The company also reaffirmed its previously given guidance to be cash-flow positive for the fiscal year.
Napster competes with Apple’s iTunes Music Store, which is currently the market leader in terms of selling digital songs. Though Napster also sells downloads it has focused on selling a music subscription service which allows customers access to a large library of digital music for a monthly fee.
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