Thursday, May 3, 2007

RealNetworks Update (RNWK)

Last week I wrote about RealNetworks' inability to turn a profit without the help of Microsofts' lawsuit, earnings came out after market yesterday and that pattern continues. Earnings came in at $0.22 per diluted share on Revenue of $129.5 million. More importantly, Operating Income came in at $53,743,000, the last payment from the Microsoft lawsuit was $60,747,000. If not for the Microsoft lawsuit, Operating Income would have been negative. For the 9 months ending 12/31/2007, they expect earnings to be $.01 to $.03 per diluted share.

On the bright side, they authorized an additional $100 million to repurchase outstanding shares. Their cash and short-term investments position is still very positive.


five_whys said...

Hi Shadunsky,

what about the business side? do you have an opinion on growth of ring tones, casual games and music business of Real?

Alex Shadunsky said...

Their revenues have been growing very well, although there was no data available on how much of it was through acquisitions. The growth in games has been tremendous. They just have not been able to turn a profit without the Microsoft lawsuit in the past 3 years, which is another big concern. And due to the competition they face, I have reservations about their main three businesses.

Alex Shadunsky said...

Thanks for stopping by.