Napster Raises Revenue Outlook

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Shares of Napster Inc. surged more than 20 percent Thursday after the L.A.-based digital music subscription service raised its fourth-quarter outlook and said its loss will be narrower than expected.


Napster soared 20.2 percent to settle at $4.05 in heavy trading on Thursday.


The company said it would post quarterly revenue in excess of $26 million due to strong premium subscriber growth, with a substantially lower loss than it had originally forecast. Analysts on average expect a fourth-quarter loss of 36 cents per share on revenue of $25 million.


Napster had previously anticipated revenue of $25 million when it reported third-quarter results on Feb. 28. At the time, it posted a third-quarter net loss of 40 cents per share.


The company said it ended the fourth quarter with more than $103 million in cash and short-term investments and a total subscriber base of 600,000 users. Based on the expected revenues for the quarter, Napster will post revenue growth of approximately 100 percent year-over year, the company said in a statement on Thursday.


Napster, a pioneer in online music, has suffered under competition from Apple Computer Inc.’s iTunes, RealNetworks Inc.’s Rhapsody music service and Yahoo Inc.’s offering, Napster shares had been on a steady decline since last year, losing nearly 62 percent of their value over 12 months.


Napster will report its fourth-quarter financial results on May 17.

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