is working with UBS to review its options after unnamed third parties have expressed interest in forming partnerships or potentially acquiring the digital music service.
Shares of the digital media company recently skyrocketed 11.3%, adding 40 cents to $3.95 in extended trading.
"Our goal is to enhance shareholder value which could potentially lead to a new strategic partnership or the sale of the company but in any event our primary focus will remain on growing Napster," CEO Chris Gorog said in a press statement.
Napster shares have had a
volatile ride in recent weeks, pitching up and down with the announcement of new portable media players, like a new line of
Zune. In addition, several digital music mergers have led analysts to speculate that Napster is potentially the
next digital music takeover target.
Analysts say the Napster brand, its distribution, back-end technology, subscriber base and its inexpensive price make it an attractive property.
On the company's latest
earnings call in early August, Gorog addressed the speculation, noting that "We do not have our heads in the sand" regarding a potential merger or acquisition, assuring investors that the company would weigh all options.
Napster CFO Nand Gangwani indicated in Monday's press release that the company has plenty to offer interested suitors, including $97 million in cash and $100 million in annual revenue.
"For the second half of our fiscal year, we project a strong up-tick in subscription growth from a base of more than half a million subscribers and a significant expansion of our mobile business, including the addition of new tier one wireless partners," Gangwani said. "We are also looking forward to launching in Japan this fall as scheduled, expanding our global footprint to include the top four music markets in the world."
The company said it does not have a timetable for evaluating its options, and cannot say if the review will result in any transactions. It will not disclose any definitive deals unless it is approved by the company's board.
During the regular session, Napster's stock sagged 1.7%, or 6 cents, to $3.55.