RealNetworks net income up with Rhapsody spinoff
RealNetworks Inc., the maker of the RealPlayer video application, said Thursday it posted net income for its first quarter, thanks to the partial spinoff of its Rhapsody music service.
Net income in the three months to March 31 came to $3.2 million, or 5 cents per share, reversing a loss of $12.1 million, or 10 cents, a year earlier.
Revenue fell 9 percent to $128.6 million from $140.8 million as music, media and games revenue fell.
Still, the results beat the expectation of analysts polled by Thomson Reuters, who on average were looking for revenue of $125.6 million.
The company's shares were unchanged at $4.04 in after-hours trading Thursday after falling 21 cents, or 4.9 percent, in the regular session.
The partial spinoff occurred on the last day of the quarter so the company included Rhapsody's operations in its results but also booked a one-time profit of $10.9 billion for reducing its stake from 51 percent to 47.5 percent.
Viacom Inc.'s MTV Networks has a similar stake in the music service.
Rhapsody continued to lose music subscribers in the quarter, falling to 650,000. It had 675,000 in the quarter that ended in December.
In April, Rhapsody cut the fee for its mobile music plan by $5 to $9.99 per month and offered a way to save songs to iPhones using its application, giving subscribers unlimited access to 9.5 million tracks as long as they keep paying.
The changes do not yet appear to have paid off.
RealNetworks is focusing its efforts now on technology products and solutions, media software and services and casual games.
Acting CEO Bob Kimball said in a statement the company made significant progress transforming itself but said "it will take some time before we see the financial benefit of our efforts."
RealNetworks said it expects the second quarter to be a low point for revenue and adjusted earnings before interest, taxes, depreciation and amortization.
Restructuring is expected to help the company's revenue and profit in the second half of the year.