Napster Posts Loss; Revenues Up Sharply

Online music service Napster Inc. (NAPS) Wednesday posted a fourth-quarter loss but said revenues rose sharply on strong subscriber growth.

Napster (search) posted a net loss of $24.3 million, or 60 cents a share for the quarter ended March 31, compared with a net loss of 20 cents per share or $6.57 million a year earlier.

Fourth quarter net revenues grew 188 percent to $17.4 million.

Analysts on average had forecast Napster to post a fourth quarter net loss of 62 cents a share and revenues of about $16.9 million, according to Reuters Estimates.

The company had a loss from continuing operations of $24.1 million or 59 cents per share, compared with a loss of $12.2 million or 37 cents per share in the fourth quarter of fiscal 2004.

Last month, Napster raised its quarterly revenue forecast for a second time in about a month, citing subscriber growth and sales of music downloads.

Wednesday, it said it expects first quarter revenues to increase to between $19 million and $21 million, citing more modest growth due to seasonal factors.

Analysts on average had expected the company to report first quarter revenues of about $18.3 million, according to Reuters Estimates.

Napster's stock was little changed in after-hours trade on Inet following the earnings release. The stock had slid nearly 27 percent or $1.70 a share to $4.65 a share before the close. Tuesday Yahoo Inc. announced plans to compete in the online music arena with lower prices.

In a statement, Napster Wednesday said it believed the very aggressive introductory pricing from competitors will be at negative gross margins and that consumers should expect rapid price increases.