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Roxio Rallies on Results

The online music software firm posts a 20 cents loss but beats the raised guidance it gave last month.

Shares of



, owner of the reformed Napster online music service, shot up after the bell Wednesday as the company beat its recently raised fourth-quarter estimates.

The company's shares were recently up 42 cents, or 10.3%, to $4.49; shares closed the regular session up 6 cents, or 1.5%, at $4.07.

Under generally accepted accounting principles, Santa Clara, Calif.-based Roxio reported a net loss of $6.6 million, or 20 cents a share, in the fourth quarter, which ended March 31. That compared to net income of $2.3 million, or 12 cents a share, in the same period a year earlier.

Revenue totaled $33.6 million, roughly flat compared with a year ago but up nearly 80% from the previous quarter.

Wall Street analysts expected Roxio to lose 40 cents a share on $30.8 million in revenue in the fourth quarter, according to Thomson First Call.

Roxio's digital media software division posted revenue of $27.5 million and pre-tax income of $4.8 million. Revenue from the company's online music division totaled $6.1 million, with a pretax loss of $9.8 million.

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Those results were better than the raised estimates offered by the company

last month. At that time, Roxio projected its online music division revenue would total $5.5 million and its software business would bring in $26 million in revenue.

Roxio, which makes CD-burning and other digital media software, moved into the online music business in October with its relaunch of Napster, the formerly free music download service that drew the wrath of the recording industry in the 1990s. Roxio claims Napster is the most popular Windows-only music download site on the Web, although it trails




iTunes site.

Looking forward, Roxio expects to post a fiscal first-quarter loss of 26 cents a share on revenue of $28 million, with $21 million from software and $7 million from Napster. Analysts were expecting a loss of 26 cents a share on $26.6 million in revenue in the second quarter.

For fiscal year 2005, Roxio's software division is expected to generate $75 million to $80 million in revenue and positive operating margins. Napster is expected to deliver double-digit sequential revenue growth throughout fiscal 2005, resulting in $30 million to $40 million in revenue in the year. The company's expenses are expected to decrease as a percentage of sales. Combined, that brings 2005 revenue to a range of $105 million to $120 million.

Analysts currently estimate Roxio will lose 96 cents a share on $110.5 million in revenue in fiscal 2005.