Napster Inc. narrowed its losses for its recently reported third fiscal quarter and doubled its subscriber base, in line with previous guidance and analysts’ expectations. It also raised its forecast for its current fourth fiscal quarter. Napster Inc. is a chief competitor of Apple’s iTunes Music Store — the company has its own music service, and recently launched a new subscription-based service called Napster To Go.
Napster chairman and CEO Chris Gorog called this week “a landmark turning point in online music” with the launch of Napster To Go. The service provides Windows PC users with the ability to “subscribe” to music they can download and transfer to certain digital music players for US$15 per month. Napster hopes to draw attention away from the iTunes Music Store by comparing the cost of filling an iPod with iTunes-bought music – $10,000 — to their service, which costs $15 a month. The comparison has not gone without
criticism, however: Complaints include that a continued monthly subscription is necessary to listen to the music and device compatibility is limited.
Napster has reported third-quarter earnings of $12.8 million or 36 cents per share, compared to a net loss of $25.6 million or 92 cents per share for the same quarter last year. Those earnings included a one-time gain from the sale of Napster’s
Roxio division to Sonic Solutions in December — net loss from Napster’s continuing operations totaled $16.4 million, or 47 cents per share. Revenue for Napster’s Q3 was $12.1 million, compared with $3.6 million for the same quarter last year. That was short of some analysts’ projections of $15.3 million.
Napster is predicting full year revenue of $43 million — the company’s previous guidance suggested $35 – $40 million. Napster is expecting to see revenues of $14 million for its current quarter, above analysts’ expectations by more than $1 million.
Napster exited the quarter with 270,000 paying subscribers. About 44,000 of those came from universities, where Napster has made a concerted effort to offer special licensing programs. That’s a 50 percent sequential increase from the second quarter, according to Napster — in line with expectations the company announced back in mid-January.
Napster’s fourth quarter guidance caused a rally in after-hours trading. It closed at 7.86 after a rough Wednesday that saw the stock price slough off about 9.1 percent of its value. Napster stock was up to 8.35 in pre-market trading on Thursday morning as MacCentral posted this article.