Lots of strong words from RealNetworks (NSDQ: RNWK) interim CEO Bob Kimball during the company’s earnings call. Kimball unveiled a new strategy for RealNetworks which will revolve around two of the company’s businesses — RealPlayer and its software as a service business for carriers. Kimball says that both of those businesses have been responsible for the majority of the company’s profits and that RealNetworks’ current structure, which spans four units, involves “too many businesses” and “lacks synergy.” The new plan, he said, was the result of a strategic review of the company, which was conducted in part by the consulting firm McKinsey & Co.
Once the company completes the spinoff of Rhapsody this quarter, Kimball says RealNetworks will next turn its attention to finally separating its gaming business; other RealNetworks products that are not profitable will be cut. “I have no intention of running this company in its usual basis,” he said. “We must do things differently and we will.” (An aside: One analyst joked during the question and answer session following Kimball’s opening remarks that he thought he had dialed in to the wrong call). Kimball says RealNetworks’ new mission is to “focus on how consumers enjoy their content; we don’t envision being in the business of creating content going forward.”
Kimball said that the company will move “very fast” with its restructuring. However, he warned that the changes RealNetworks is planning won’t have an effect during the first quarter. That, he said, explained the company’s dismal outlook for its first quarter results, which executives attributed in part to the continued loss of Rhapsody subscribers.
While RealNetworks is simplifying its structure, it will also invest in “profitable growth.” CFO Michael Eggers said that could involve both acquisitions and the introduction of new services related to the company’s new areas of focus. But, he said, RealNetworks’ plans for its nearly $400 million cash stockpile haven’t changed significantly, adding the company would only use “some” of that cash for these investment initiatives.