Napster incurs 3Q loss, but upbeat on prospects |
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Fri, 10 Feb 2006 02:05
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LOS ANGELES: Online music company Napster Inc. posted a higher quarterly net loss of $17 million for the third quarter ended 31 December 2005, up from a year-ago net loss of $12.8 million, impacted by higher sales and marketing costs, despite an almost doubling revenue.
The per-share loss of 40 cents is, however, lesser than analysts' expectation of 61 cents-a-share.
The company's revenue rose to $23.5 million from $12.1 million in the year-ago quarter. The company said its subscriber base is now more than 500,000 and subscriber growth has been 110 per cent. Revenue from subscribers accounted for 86 per cent of the company's total revenue.
The company said its sales and marketing expenses had risen 69 per cent, which largely contributed to the deficit. It had launched during the quarter its XM+ service and also Napster Germany.
The company has estimated its revenue to be $25 million for the current quarter.
In spite of the depressing figures, the company, which relaunched as a legal service, said it is on path to profitability and that it had enough cash to run until 2007.
Chris Gorog, chairman and chief executive, said the prospects for its new Napster.com, the growth in subscription business and its focus on cost controls will contribute to accelerating the path to profitability.
Gorog reiterated that the company was not looking to sell itself. There are rumours floating that it is being lapped up by Google.
Napster shares rose 12 cents, or 3.3 per cent in after-hours electronic trading. The stock added 3 cents to close at $3.61 in the regular session on the Nasdaq.
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Digital music sales triple in 2005 