RealNetworks Returns to Profit, Talks Google Deal

U.S. digital media company RealNetworks (NASDAQ: RNWK) swung back into the black in the third quarter as cost-cutting offset sliding revenue from music and games.

RealNetworks, which delivers music and other entertainment content to computers and mobile devices, saw a meager net profit of $1.5 million — a gain of less than 1 cent per share — compared with a net loss of $4.5 million, or $0.03 per share, a year earlier.

The Seattle-based company said third-quarter revenue fell 8 percent to $140.3 million compared with a year ago. Analysts, on average, had expected $140.9 million.

RealNetworks CEO Rob Glaser said in an interview the company boosted its bottom line by reducing costs in its supply chain and in staffing. Revenue from music, technology products and games was down in the period, with consumers nervous about spending in a lingering recession, he said.

For the fourth quarter, RealNetworks expects overall revenue to decline year-on-year, as sales of media software and service products remains flat.

RealNetworks launched an application in September allowing Apple (NASDAQ: AAPL)’s iPhone and iPod Touch users to access the RealNetwork music service Rhapsody and the company is now working with Google (NASDAQ: GOOG) on a Web music search project.

“We’re very excited about the strategic impact of the new initiatives and the consumer uptake, but we think the monetization of these new initiatives will take a while to ramp up,” Glaser said.

RealNetworks’ shares held steady at $3.87 in extended trading, matching their regular-session close. They had risen as much as 3.4 percent to $4 after hours.

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