It's bad enough when you have to announce a revenue slowdown. It's arguably worse when an embarrassing glitch keeps the Webcast in which you disclose the slowdown from being heard by investors -- and you are the market leader in video and audio Web software.
That was the case with
Tuesday, when it said after its
earnings release that advertising revenue growth would slow in the fourth quarter, a fear that has pummeled the stock recently.
CFO Paul Bialek said in a conference call that some long-term ad contracts were renewed at rates that will bring in about $3 million less than they previously did, reflecting, he said, an advertising market that is "very choppy and very uncertain." Advertising accounted for about 20% of RealNetwork's $67.1 million in third-quarter revenue.
Fears that an Internet advertising slowdown would hurt RealNetworks brought it down to a 52-week low last week. It closed at $21.69 and was trading at $18 in after-hours trading Tuesday.
Unfortunately, investors weren't able to access the Webcast conference call from a link on the company's site, although RealNetwork spokeswoman SueEllen Barnett said the company fixed the glitch within the first 15 minutes of the call.
Bialek said the company wasn't changing its long-term guidance and remained optimistic about the future, especially in light of RealNetwork's continuing the growth in users -- confidence echoed by some analysts.
"We do think RealNetworks is on the right side of advertising and that over time it will be a strong growth engine for them," said Adam Holiber, vice president of research at
Wedbush Morgan Securities
. He said his strong-buy recommendation will likely stand. (Wedbush hasn't done underwriting for RealNetworks.)