RealNetworks Says Earnings Are Below Expectations

RealNetworks (www.realnetworks.com) announced that its fourth quarter results will be below market expectations. The company cited slower tech spending and the general market downturn as reasons for the slower growth.

RealNetworks expects to report pro forma diluted earnings per share of approximately $0.02. Revenue for the fourth quarter is now expected to be in a range of $58 million to $60 million. Actual results for the quarter and fiscal year will be reported around January 30, 2001.

Things aren't all bad; RealNetworks says this is its 11th consecutive quarter of positive cash flow and its sixth consecutive quarter of profitable pro forma results.

During a conference call today, chairman and CEO, Rob Glaser, said that the company is "built to withstand any short term volatility." He said that the company is "managing resources very prudently" in these tough times.

Earlier today, RealNetworks finally reported numbers on its GoldPass content subscription service. It said there are over 125,000 consumers paying $9.95/month for premium audio/video content. The service was launched in August 2000, and delivers content every month to its subscribers. RealNetworks says that GoldPass is the fastest growing paid media subscription service in Internet history, passing even the Wall Street Journal online service, which took four years to surpass 500,000 subscribers.

"We're very happy with that number," said Glaser during the conference call. The number, said Glaser, included recurring subscriptions from people who have been members for more than a month.

"Advertising," said Paul Bialek, CFO, "makes up RealNetworks' smallest revenue segment, less than 12 percent of total revenues." With $375 million in cash at the end of September, RealNetworks is optimistic of its long term prospects," said Bialek.

Because the announcement was made after hours, it didn't affect trading today. In after-market trading, however, the stock was down about 30 percent.