SUNW inked a deal with these guys last week. It looks like to me the only threat Gates has is DOJ. Actions such as these will eventually be his own undoing since he is not smart enough to know when enough his enough.
RealNetworks Beats Estimates,
But Investors Send Stock Lower
By NICK WINGFIELD
THE WALL STREET JOURNAL INTERACTIVE EDITION
SAN FRANCISCO -- Shares of RealNetworks slipped Thursday in spite
of fourth-quarter results from the Internet audio-software firm that exceeded
Wall Street's expectations.
Thursday, RealNetworks' stock lost 3/4, or
4.4%, to 16 3/8 on the Nasdaq Stock Market.
Meanwhile, the Nasdaq Composite Index rose
8.67 to 1619.49, while Morgan Stanley's
high-tech 35 index added 1.52 to 465.17.
RealNetworks released fourth-quarter results
after the market closed Wednesday, reporting
a net loss of $2.6 million, or nine cents a share,
compared with a loss of $1.5 million, or five
cents a share, for the year-ago period. That
loss was narrower than the consensus estimate
of analysts surveyed by First Call for a loss of
11 cents a share. Revenue, meanwhile, was
$10.3 million, an 80% jump from the $5.7
million recorded during the fourth quarter of
1996.
Seattle's RealNetworks helped pioneer use of
audio on the Internet by developing software that "streams" sound, a
technique that enables users to avoid lengthy waits by listening to audio
feeds as they are downloaded to their computers. The company's
RealAudio software has become the clear leader for broadcasting sports
games, musical concerts and news radio over the Internet. The company
has also made significant inroads into the video market with RealVideo,
though that market is growing more slowly since streaming motion pictures
are severely hampered by the limited speed of most Internet connections.
"In the audio space, there's no second place," said Mr. Powers. "It's Real
or it's nonexistent."
Not nonexistent for long, though. Although RealNetworks clearly has the
leading brand and presence on top Web sites, Microsoft is gunning for a
larger role in the streaming-media market. In fact, the Redmond, Wash.,
software giant took a 10% stake in RealNetworks in July for $30 million,
and the spent another $30 million to license some of the secret ingredients
of RealNetworks' streaming technology.
Microsoft plans to combine RealNetworks' software with its own streaming
technology, known as NetShow. Microsoft has also invested in another
video streaming firm, VDOnet, and bought a third, Vxtreme, outright. Its
moves in the streaming market are being examined by the U.S. Justice
Department as part of its antitrust investigation into Microsoft.
With a head-to-head battle with Microsoft all but certain, RealNetworks
held an initial public offering in November, hoping to raise enough money to
fortify its position in the market. Since opening at 12 1/2, the stock has
fluctuated between the high- to mid-teens. John Powers, an analyst at
BancAmerica Robertson Stephens, said he wasn't surprised to see the
stock dip slightly a day after its earnings announcement because it's trading
at such a high multiple of 1998 earnings expectations.
"It's one of those pricey stocks where no news is good enough" to cheer
investors, he said, adding that he doesn't expect to see a profit from
RealNetworks until the end of 1999.
There is one financial certainty in RealNetworks' immediate future: The
company will get $2.4 million in revenue a quarter for the next several years
from its $30 million technology-licensing deal with Microsoft, according to
Mr. Powers. |
