RealNetworks Reports First Quarter Results

Real Networks (www.realnetworks.com) announced on Wednesday its financial results for the quarter ended March 31, 2001. The company reported net revenues for the quarter of $50.4 million, which is down slightly from its first quarter earning last year of $53.5 million. In a conference call, CEO Rob Glaser, stated, "Given the current challenging environment our results should be considered satisfactory, although hardly a cause for celebration."

The company reported a pro forma net earnings for the quarter of $3.5 million, or $0.02 per diluted shared, which compares to pro forma net earnings of $8.8 million, or $0.05 per diluted share, in the first quarter last year.

With the lovely accounting shield of "pro forma" taken away, or including the cost of non-cash goodwill and acquisition-related charges, Real Network's net loss for the first quarter was $24.4 million or $0.15 per chare, which compares to a net loss of $18.8 million, or $0.12 per share for Q1 last year.

Real Networks spent $17.6 million to incubate MusicNet, of which it now owns a 40 percent stake. The pro forma results do not take this sum into account.

The company's financial results for the quarter also reflect its expanding focus and the harsher realities of today's financial environment. Real's Systems and Infrastructure department accounted for 53 percent of revenue for this quarter, a drop of 15 percent. But luckily for Real, its consumer division, consisting of software sales and its Gold Pass subscription service, rose to assume some of the slack.

Real's revenue from Gold Pass for Q1 was $4.3 million, which represents a 143 percent increase from last quarter. Glaser noted that Real's agreements with Major League Baseball and the NBA represent that type of "marquee" content that should drive subscription numbers up.

Real states that it currently has 200,000 subscribers to the service or 0.01 percent of Real Player users.