RealNetworks Sees Light in the Second Half - TheStreet

Internet media company

RealNetworks

(RNWK) - Get Report

met analysts' fourth-quarter earnings estimates and made an optimistic forecast for the second half of 2002.

The company, which markets software for broadcasting audio and video over the Internet, as well as services employing that software, reported fourth-quarter revenue of $45.4 million, edging past the $44.8 million consensus published by Thomson Financial/First Call.

Earnings, excluding noncash goodwill amortization and acquisition-related charges, along with an adjustment for previous staff-reduction charges, amounted to $1.6 million for the quarter, or a penny per share. That number matched analysts' estimates but lagged behind the 2-cent pro forma profit from the fourth quarter of 2000

Including all costs and charges, RealNetworks reported a net loss of $11.8 million, or 7 cents a share, for the quarter ended Dec. 31. That compared with a loss of $33.3 million, or 21 cents a share, a year earlier.

Tbe company, which has made a major push over the past year to develop for-pay Internet media services for consumers, said it passed the milestone of 500,000 paying subscribers earlier this month, up from "more than 400,000" in mid-October.

In December the company launched the RealOne Music premium subscription service based on the MusicNet venture co-owned by RealNetworks,

AOL Time Warner

(AOL)

, Bertelsmann and EMI. CEO Rob Glaser said "tens of thousands" of consumers were subscribing to MusicNet through RealOne Music or through AOL's version of the service.

Looking forward, RealNetworks says it thinks the fourth quarter of 2001 represents "the start of a modest upward trend in quarterly sequential revenue growth." The company, despite its caution, says it expects "slight to moderate" revenue growth in the first half of the year, with increased growth in the back half of the year.

Because of plans for further investment in the company's consumer subscription business, RealNetworks says it believes its quarterly pro forma operating income will stay sequentially flat from the fourth quarter of 2001 through the first and second quarters of 2002. As with its revenue, the company expects an "increasing trend" in its pro forma operating income in the second half of 2002.

RealNetworks' shares fell 32 cents, or 4.7%, to $6.53, in normal trading. In after-hours trading following the release of the company's financial results, shares lost an additional nickel.