RealNetworks Expects Bigger Sales Drop Ahead


RealNetworks (NSDQ: RNWK), which is in the midst of a torrent of structural and management changes, posted a five percent drop in revenue during the quarter. Revenue fell to $145.5 million, while the company posted a net loss of $13.3 million (11 cents per share), an improvement from the company’s loss of $240.5 million during the same period a year ago. RealNetworks’ poorest performance was in its music business, which posted a 14 percent drop in sales; subscribers to its Rhapsody music service dropped to 675,500 from 700,000 during the prior quarter. The company’s overall revenue figure was roughly in line with expectations, although analysts had been expecting a smaller loss of six cents per share.

In a statement, acting CEO Bob Kimball alluded to the many changes at the company saying, “We are aggressively moving to transform RealNetworks into a more simple and focused company that delivers value to its shareholders.” He called the company’s announcement this week that it will spin off Rhapsody as “a first step.”

Financially, however, the company isn’t expecting an improvement (at least right away); it says that revenue will drop 12 percent year-over-year during the first quarter and that all of its business units will post drops in sales.

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