RealNetworks kept its promise to make a profit by the end of 2004, but only if you don't count the price of suing Microsoft.

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RealNetworks kept its promise to make a profit by the end of 2004, but only if you don’t count the price of suing Microsoft.

The Seattle digital-media company yesterday reported a net loss of $972,000, or a penny per share, for the fourth quarter. If you take out the $3 million in costs related to its antitrust lawsuit against Microsoft, the company had a quarterly profit of $2 million, or a penny per share.

For its fourth quarter in 2003, RealNetworks reported a $5.3 million net loss, or 3 cents a share, which included $1.6 million related to the Microsoft lawsuit.

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The company reported $72.5 million in sales for the quarter, up 34 percent from the same period in 2003.

For the full year, RealNetworks reported a $23 million net loss, wider than the $21.5 million it saw in 2003. The full-year loss included $11 million, or 7 cents a share, in costs related to the Microsoft lawsuit. Full-year sales hit $266.7 million, up 32 percent from 2003.

The company had 1.55 million paying subscribers, which was unchanged from the third quarter even though the number of subscribers to RealNetworks’ music services rose to 700,000 from 625,000 during that time. Executives said yesterday that it lost subscribers in other areas after it stopped offering stand-alone video packages from CNN and NASCAR.

RealNetworks likely also lost subscribers after it raised the price of its SuperPass online content service last August by $3 to $12.95 a month.

The company has turned its focus to selling online music subscriptions to its Rhapsody service, single-song downloads and Internet-based games, and those areas are becoming more significant in its financial statements as well.

Music sales, including subscriptions to Rhapsody, rose by nearly $3 million from the third quarter to $21.6 million and represented 30 percent of the company’s total revenue. Games revenue rose by $1 million to $10.1 million, or about 14 percent of the total revenue.

Sales of business products and services continued to spiral to $11.8 million, or 16 percent of total revenue, down from $12.9 million in the third quarter.

RealNetworks said it expects to report between $73 million and $74.5 million in sales for the current quarter and post a net loss of between a penny and 2 cents per share. It estimated its Microsoft lawsuit costs at $3.75 million for the quarter.

RealNetworks’ share price closed at $5.95 yesterday and rose 25 cents in after-hours trading. The company released its earnings report after the market closed.

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com

RealNetworks
Figures in parentheses are losses.
Dec. 31 %
4th QTR 2004 2003 CHG
Profit ($972,000) ($5,327,000) +81.8
Per share (0.01) (0.03) +66.7
Sales 72,546,000 54,056,000 +34.2
Annual 2004 2003 CHG
Profit ($22,997,000) ($21,451,000) -7.2
Per share (0.14) (0.13) -7.7
Sales 266,719,000 202,377,000 +31.8