Updated from July 28 RealNetworks ( RNWK) posted a narrower second-quarter loss Wednesday as antitrust lawsuit costs continued to weigh on results. For the quarter ended June 30, the Seattle-based Internet media company posted a loss of $4.6 million, or 3 cents a share. That's narrower than the year-ago loss of $9.6 million, or 6 cents a share. Revenue rose 32% from a year earlier to $65.5 million. The company said latest-quarter results included $2.8 million in lawsuit costs. Without those costs, the second-quarter loss was $1.9 million, or a penny a share. Analysts surveyed by Thomson First Call had forecast a 4-cent per-share loss on revenue of $64 million. "In the second quarter we achieved strong revenue growth in our core consumer businesses," said CEO Rob Glaser. "We now have more than 550,000 subscribers to our digital music services, which we believe makes us No. 1 in music subscriptions. We continue to make progress on the bottom line as well, as evidenced by our return to positive EBITDA for the second quarter, excluding antitrust litigation costs." Last December, RealNetworks sued Microsoft ( MSFT), claiming violations of federal and state antitrust laws. RealNetworks claimed Microsoft "illegally used its monopoly power to restrict competition, limit consumer choice and attempt to monopolize the growing field of digital media." Microsoft called the suit a "rehash of the same issues that have already been the subject of extensive litigation and a tough but fair resolution of the government antitrust lawsuit." RealNetworks guided to in-line third-quarter results, targeting a loss of 3 to 4 cents a share on revenue of $67 million. Excluding lawsuit-related costs, the third-quarter loss will be a penny or two a share. RealNetworks said it expects sequential revenue growth in the third quarter to moderate due to two timing-related factors: First, Real had a full quarter of revenue from GameHouse during the second quarter, compared to only a partial quarter of revenue during the first quarter of 2004. This resulted in approximately $1 million of sequential revenue growth in the second quarter of 2004.
Second, during the second quarter, both Real's original Google distribution contract and a more recent Google contract were in effect for the entire quarter. This caused a temporary increase in revenue for the second quarter of 2004 that will end early in the third quarter of 2004, when the original Google agreement expires. The company said once again that it expects to reach quarterly profitability, excluding expenses relating to antitrust litigation, by the end of 2004. On Thursday, the stock slipped a penny to $5.67.