Napster Posts Surprising Q2 Earnings

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Napster Inc. reported a smaller second-quarter loss Thursday as its online music service posted higher revenue from subscriptions and mobile music sales despite a decline in paid subscribers.


Napster reported a net loss of $5.1 million (-12 cents per share), a 44 percent improvement compared to a loss of $9 million (-21 cents) reported the same period a year earlier. The results beat analysts’ expectations of a 15 cent loss, according to Thomson Financial.


Revenues for the Los Angeles-based Internet music provider rose 24 percent to $31 million, also beating Wall Street predictions of $30 million.


“We are pleased that we have been successful at much more efficient cash management, generating positive cash flow now for two successive quarters, while at the same time substantially improving our product lineup, growing our partner base and continuing to enhance our market position,” Chief Executive Chris Gorog said in a statement.


Napster ended the quarter with about 750,000 paid subscribers about 20,000 less than the previous quarter but said the decline was due to “historical quarterly patterns.”


Napster added that it expects revenue for the third quarter to increase to about $33 million, driven by its sales of music to mobile phones.


During the quarter, the company launched a Web-based version of its online music service that allows subscribers to listen to audio streams without having to download and install Napster software on their computers.


The company also boosted its mobile music offerings by signing a deal with AT & T; Inc. to deliver music wirelessly to mobile phone users. That service, which offers songs for $1.99 each, or $7.49 for five per month, launches next month.


Shares in Napster closed up 3.4 percent Thursday and continued to gain another 1.2 percent Friday to $3.40 in afternoon trading Friday on the Nasdaq.

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