RealNetworks Can't Match Buildup

The stock reverses course after a huge Tuesday afternoon run.
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RealNetworks

(RNWK) - Get Report

sold off late Tuesday after the digital-music outfit's fourth quarter and 2006 outlook failed to match Tuesday's big buildup.

The Seattle-based company also bid adieu to its chief financial officer. RealNetworks slid 4% in after-hours action, partly reversing a 15% surge during regular trading.

For the quarter ended Dec. 31, RealNetworks made $296 million, or $1.61 a share, reversing the year-ago loss of $972,000, or a penny a share. Revenue rose 15% from a year ago to $84 million. Analysts surveyed by Thomson Financial were looking for earnings of $1.45 a share on revenue of $84.6 million.

Latest-quarter earnings were boosted by solid subscriber growth and the settlement of antitrust suits with

Microsoft

(MSFT) - Get Report

. RealNetworks said it hit 1.4 million subscribers at quarter-end.

"2005 was a watershed year for RealNetworks. We achieved record annual revenue, returned the company to profitability, settled our antitrust litigation in a manner that generated significant shareholder value, and dramatically grew our games business through both organic growth and acquisitions," said Chairman Rob Glasser.

The company also named eight-year veteran Michael Eggers chief financial officer, replacing Roy Goodman, who is moving to the East Coast for personal reasons but will remain to assist with treasury, IR and other finance functions. "I am delighted to announce the promotion of Michael Eggers to CFO," said Glaser. "Michael's razor-sharp intellect, strong financial background, industry experience, and proven leadership skills make him the ideal choice to serve as our CFO."

For the first quarter of 2006, Real expects to make 12 cents a share or so on revenue of $82 million to $86 million. For the full year, it expects to make 75 to 80 cents a share on revenue in the range of $365 million to $380 million. Analysts were looking for first-quarter earnings of 19 cents a share on $91 million in revenue and 2006 earnings of 99 cents a share on $382 million in revenue.

Late Tuesday, RealNetworks fell 38 cents to $8.15.