Napster Optimistic About Its Future

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Napster Snoozing Less [TheStreet.com]

Summary: Online music company Napster posted a $0.21/share ($9M) loss for Q2, but beat Street estimates of -$0.27/share. Its total paid subscriber base of 518,000 was up slightly. Napster said it expected "double-digit" revenue growth in 2007. There has been speculation the firm might be acquired -- it hired UBS to help it explore strategic alternatives -- but CEO Chris Gorog said on the earnings conference call he would not discuss the situation "until there is something to announce." Gorog cited projected growth in music-enabled cell phones to provide growth for Napster going forward; the company recently inked deals with NTT DoCoMo Inc. in Japan and Cingular, the latter saying it expects 1/2 of all handsets shipped in 2007 will be music enabled. Its website's unique visitors grew 42%, a boon for its ad-supported free service. CEO Gorog: "We are more optimistic about our business than we have been in some time."
Related links: Earnings Call Transcript. Additional coverage: Reuters. Commentary: Napster to "Thoughtfully Examine" Partnerships • Napster Gives It Away For Free • Ugly Conference Call Moments
Potentially impacted stocks and ETFs: Napster Inc. (NAPS), UBS AG (UBS) • Partners: NTT DoCoMo Inc. (DCM), AT&T Inc. (T) and BellSouth Corp. (BLS) own Cingular • Competitors: Apple Computer Inc. (AAPL), RealNetworks Inc. (RNWK)

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