Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times reporter Sharon Chan.
November 7, 2006 10:42 AM
Posted by Kim Peterson
The profit, once again, was skewed by some big payments from one-time rival Microsoft related to the antitrust lawsuit settlement between the two companies.
Quarterly profit was $42.2 million, up from $11.2 million in the year-ago period, and sales beat analysts' estimates to hit a record $93.7 million. If you take out the Microsoft payments and other factors, net income was $8.7 million compared with $6.3 million in 2005.
Today, Kaufman Bros. maintained its "buy" rating and raised its target price from $12 to $13.50. JMP Securities raised its price from $8 to $9.
Other analysts weren't so sure. The total number of RealNetworks' subscribers rose by only 50,000 from the second quarter of this year to 2.45 million, and about half of that increase was in music subscriptions. Music subscriber growth appeared to be slowing down, with 1.65 million subscribers compared with 1.625 million three months ago. Subscription sales represent more than half of Real's total revenue.
That sluggish growth in music subscribers adds some risk, according to analysts with Oppenheimer, who have a "neutral" rating on the company. Those analysts said the slowdown might show that consumers prefer downloadable music services and the end-to-end music systems such as Apple's iPod universe.