Napster Offers Enthusiastic Revenue, Subscriber Snapshot

Napster offered an enthusiastic subscriber and financial assessment ahead of its first quarter financial review, scheduled for mid-May.

The company now anticipates quarterly revenues of $28 million, better than a street estimate of $26.6 million, and an aggregated subscriber tally of 830,000.  “In mid-March, we successfully integrated over 225,000 AOL Music Now paid subscribers onto the Napster service,” said Napster chairman and chief executive officer Chris Gorog.  “We also enjoyed healthy organic growth adding another 40,000 net paid subscribers during the quarter.”  Gorog noted that Napster eclipses on-demand rival Rhapsody in terms of overall subscribers, though Rhapsody parent RealNetworks has not disclosed subscriber figures for its service.  On an aggregated level, RealNetworks recently offered a subscriber tally of 2.25 million, a figure that traverses Rhapsody, premium radio services, and mobile subscribers powered by its WiderThan unit.

For Napster, the AOL Music Now acquisition helped to transform the subscription picture.  In January, Napster paid $15.6 million for the then-350,000 base, just under $45 per head, a move that placed the company in a position to eventually surpass one million.  But continued losses may keep investors concerned, despite the revenue and subscriber gains.  Those deficits have traditionally been heavy, though the company may be containing the bleeding somewhat.  During the fiscal third quarter ending December 31st, Napster lost $9.5 million, a narrower loss than year-ago dips of $17.0 million.  Meanwhile, cash burn levels will be important to watch.  In the same period, the company finished with a cash account of $80.9 million, down from $90.3 million the year earlier and a drop of $14 million over a six-month period.  Napster shares most recently landed at $4.30, part of a relatively lukewarm reception on the street.