In posting its quarterly financial results on Monday,
Roxio Inc. announced plans to sell its software division to
Sonic Solutions in a transaction valued at US$80 million. The deal is subject to the customary regulatory and shareholder approval, but Roxio has already outlined plans to change its name to Napster, focused solely on selling digital music. Roxio makes Toast Titanium CD and DVD burning software and Jam audio mixing software for the Macintosh, as well as Easy Media Creator and other titles for Windows.
Roxio Chairman and CEO Chris Gorog said the move will allow his company to focus its efforts on the burgeoning online music market. He added that the $80 million transaction will significantly boost Roxio/Napster’s net cash position — an important competitive advantage for the company, which has struggled against Apple’s domination of the online digital music market with its iTunes Music Store service.
Roxio posted $29.9 million in net revenue for its first quarter of fiscal 2005, which ended June 30, 2004. That’s compared to $24.2 million for the same quarter a year ago. Roxio’s net loss for the quarter was $2.6 million, or $0.08 per share, compared to a net loss of $370,000 or $0.02 per share for the same quarter a year ago. That’s considerably better than Roxio’s prior guidance of $0.26 per share and ahead of analysts’ expectations too.
Roxio expects revenues of $25.0 million for the second quarter of fiscal 2005 with revenues of $17.0 million. Roxio hopes to finalize the sale of its software division in the fourth calendar quarter of 2004.
The comparatively favorable earnings news and Roxio’s plans to focus solely on Napster seems to have been well received by investors — Roxio’s stock was up 7.49 percent at 4.45 in after hours trades.