Updated from 5:02 p.m. EST

Napster

( NAPS) posted a loss for the quarter on Wednesday, but the bleeding wasn't as bad as what analysts projected.

For the second quarter, Napster lost $9 million, or 21 cents a share, improving from its loss of $13.6 million, or 32 cents a share, in the same period last year. Analysts polled by Thomson First Call had forecast a greater loss of 27 cents a share.

The online music company matched the consensus revenue forecast, posting $25.5 million, up 9% from $23.4 million in sales a year ago.

Shares rose 6 cents in late trading to $4.51, almost making up for losses during the regular session.

While there has been much

speculation about if and when the company will be acquired - the music firm has

hired UBS to help it review its options - Napster CEO Chris Gorog said on the quarterly call with financial analysts that he would not discuss the situation until there is something to announce.

Instead, Gorog highlighted the projected growth in music-enabled cell phones on the call, and

reiterated how the trend "will provide a very significant growth driver for Napster going forward."

The company has made recent

deals with

NTT DoCoMo

(DCM)

in Japan and

Cingular

, jointly owned by

AT&T

(T) - Get Report

and

BellSouth

( BLS), to reach more mobile customers.

Gorog said Cingular expects that by the end of 2007, half of its handsets shipped will be music-enabled.

He also said that Napster's

free site has lowered the company's customer acquisition costs, and helped reduce churn to an all-time low.

Napster.com's unique visitors grew 42% in the second quarter, giving Napster the ability to grow its ad-supported free service and prompt paid subscriber growth though the rest of the year, the company said.

Napster said its total number of subscribers is 518,000, including 31,000 college subscribers, as of Sept. 30.

"We are more optimistic about our business than we have been in some time," Gorog said.

For the December quarter, Napster said its sales, including about $2 million in nonrecurring revenue primarily related to prepaid card breakage (cards that are bought but not redeemed), should exceed $27 million. The consensus target is $28.5 million in sales.

CFO Nand Gangwani said the company expects a loss of $13 million, or 30 cents a share for the third quarter, a penny more than Wall Street's forecasted loss of 29 cents a share.

For the full fiscal year ending in March 2007, Gangwani said the company anticipates "solid double-digit annual revenue growth for fiscal 2007."

Analysts peg the fledgling music company for $112.7 million in revenue for the year.