Roxio ( ROXI), the company that now runs Napster, continued its upward climb Wednesday, soaring more than 10% on news that it will bring the digital music service to the U.K. this summer. The move, announced in the U.K. by Roxio CEO Chris Gorog, had been rumored for some time. Still, Roxio shares jumped 39 cents, or 10.5%, to $4.11 in heavy volume Wednesday. Last week the company gained 9% on a New York Post report that Microsoft ( MSFT) has been "quietly shifting some of its marketing muscle" to Roxio. First Albany analyst Paul Tryon likes the stock long term, citing the company's expertise in digital music and a solid relationship with Microsoft. Tryon, however, has a neutral rating on the stock because the Santa Clara, Calif., company is still burning cash. Roxio's net revenue for the third quarter of fiscal 2004 was $18.8 million, compared with $26.4 million in the third quarter of the prior fiscal year. Roxio's reported net loss for the third quarter was $25.6 million, or 92 cents a share, compared with a net loss of $9.2 million, or 47 cents per share in the third quarter of the prior fiscal year. Tryon said the company's software business should be profitable on an operating basis in the fourth quarter and through fiscal 2005, but online music will not be profitable in the near future. (First Albany does not have a banking relationship with Roxio.) Microsoft, meanwhile, may have suffered a major setback on the digital music and antitrust fronts. According to the Associated Press, the European Union wants to force the software giant to offer computer makers a version of Windows without any multimedia program to give rival companies a better shot at getting their products on consumers' desktops. European regulators fear that the market for digital music could be dominated by Microsoft, whose Windows Operating System contains a media player, in much the same way Microsoft crushed Netscape by making a Web browser part of Windows. Microsoft has been negotiating with European regulators for some time in an effort to avoid a time-consuming and expensive legal battle similar to the one it waged in the U.S. during the Clinton administration. Microsoft shares dipped 2 cents, or 0.1%, to $26.37 Wednesday. Please note that due to factors including low market capitalization and/or insufficient public float, we consider Roxio to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.