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RealNetworks' Net Loss Narrows in 4th Quarter

California

January 29, 2003|Jon Healey | Times Staff Writer

RealNetworks Inc. on Tuesday reported a narrower net loss for the fourth quarter, with revenue boosted by a growing audience for its online audio and video services.

Results for the three months ended Dec. 31 reflect Real's shift from a technology company to an online media distributor that also develops technology.

Real's net loss was $2.5 million, or 2 cents a share, compared with a loss of $11.8 million, or 7 cents, a year earlier. Revenue rose 2% to $46.2 million from $45.4 million.

Even as revenue from online subscription services grew 6% from the previous quarter to $22.7 million, its technology sales slumped 11% to $13.8 million, the company reported.

For all of 2002, Real reported a net loss of $38.4 million, or 24 cents a share, compared with a loss of $74.8 million, or 47 cents, in 2001. Revenue was $182.7 million, down 3% from $188.9 million the previous year.

The Seattle-based company reported more than 900,000 subscribers for its online audio and video subscriptions, including exclusive offerings from professional sports such as Major League Baseball and NASCAR. That's 80% more than the end of 2001 but only about 6% more than the end of the third quarter -- a slowdown the company blamed in part on the end of the baseball and auto-racing seasons.

Phil Leigh, an analyst for investment bank Raymond James & Associates, said the audience for Internet subscription services should be growing exponentially, and Real's results "imply that they haven't found the right formula to sustain exponential growth." Leigh's firm is a market maker for Real on Nasdaq.

Last year "was an important transitional year for us," Chief Executive Rob Glaser said in a conference call with analysts. Real drastically changed its approach to the technology side of its business, opening its online broadcasting software to developers in the hope of making it the de facto industry standard.

The company faces fierce competition on that front, most notably from Microsoft Corp. Still, Real executives did not blame competitors for the decline in technology sales but pointed to the lingering downturn in the telecom industry.

Real announced its earnings after the markets closed. In regular Nasdaq trading, its shares rose 8 cents to $3.31.

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