February 12th, 2009
Real posts Q4 loss, forecasts declining revenue for Q1
Real Networks reported a net loss for the fourth quarter and said it expects first quarter revenue to decline, compared to the same quarter a year ago. (Statement)
It reported a net loss of $240.5 million, or $1.78 per share on sales of $152.6 million, a decline of 3 percent from $156.9 million a year ago. The loss reflected charges of about $240.7 million. In the year-ago quarter, the company reported net income of $2.7 million, or 2 cents per share, in the year-earlier quarter.
For the full year, revenue was up 7 percent to $604.8 million, compared with $567.6 million in 2007. Net loss for the year was $243.9 million, or $1.74 per share, compared with net income of $48.3 million, or $0.29 per diluted share, in 2007. The company said the net income in 2007 included a gain from a $60.7 million antitrust settlement with Microsoft.
The company did not provide full year 2009 guidance, citing “the high level of uncertainty regarding consumer spending, global economic trends, foreign exchange rate fluctuations, and credit markets.” In a statement, CEO Rob Glaser said:
In spite of a difficult and turbulent macro-economic environment, RealNetworks delivered revenue in line with our fourth-quarter expectations. We believe that the high-value, low- cost digital entertainment products and services we offer consumers are a great fit for these tough financial times.
Its games and music divisions both saw increases in revenue in the fourth quarter, up 9 percent and 8 percent, respectively. But the other divisions - Music, Software and Services and Technology Products and Services - both saw declines, 11 percent and 13 percent, respectively. For the first quarter of 2009, the company expects Music to see gains, Games to remain flat and the other two businesses to post declines, compared to the year-ago quarter.
One business segment that remains uncertain is Music Software and Services, where the new RealDVD product remains unavailable to customers because of a legal battle with the Hollywood Studios.
On a conference call with analysts, Glaser said the legal battle is only the second one that the company has encountered. With Microsoft, the company anticipated a long legal battle that could potentially end with one big payoff.
With the battle against the Motion Picture Association of America, the company expects a relatively quick resolution. Assuming the company is able to get the MPAA’s injunction lifted and the product download window opened, the payoff becomes the opening of new potential business opportunities for the company, Glaser said. Given the pending litigation, Glaser declined to elaborate on future plans.
The two sides are expected to return to court in April.
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Sam Diaz is a senior editor at ZDNet. See his full profile and disclosure of his industry affiliations.
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