NAPSTER SINGING THE DIGITAL BLUES GLOOMY Q1 FORECAST CAUSES CONCERN.Byline: Evan Pondel Staff Writer BEVERLY HILLS Beverly Hills, city (1990 pop. 31,971), Los Angeles co., S Calif., completely surrounded by the city of Los Angeles; inc. 1914. The largely residential city is home to many motion-picture and television personalities. - Digital music provider Napster An online music store from Napster, LLC, New York (www.napster.com) that lets you download copyrighted titles for a fee. In October 2003, the Napster site went live again after being dormant for many months. Inc. said Wednesday Wednesday: see week. that it expects a first-quarter loss of at least $27 million, furthering concerns that competitors could price the company out the market. Napster's outlook arrived the same day the company reported a fourth- quarter net loss of $24.3 million, or 59 cents a share, compared with a net loss of $6.6 million, or 37 cents a share, reported in the like period a year ago. Drawing more concern, Yahoo Inc. unveiled a music subscription service Tuesday that poses direct competition for Napster. Yahoo's service is priced at $6.99 a month, while Napster's costs $14.95 a month. ``The key question here is how long can Yahoo sustain pricing at that significant of a discount,'' said Gene Munster, analyst with Piper Jaffray Piper Jaffray & Co. (NYSE: PJC), often shortened to just Piper Jaffray or PiperJaffray, is a U.S. middle-market investment banking firm based in Minneapolis, Minnesota and is a focused on delivering financial advice, investment products and transaction execution in Minneapolis, who noted that if Yahoo can keep its pricing at that level beyond three months, ``it's likely to have a negative impact (on Napster).'' But Chris Gorog, Napster's chairman and chief executive officer, characterized char·ac·ter·ize tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. such concerns as an ``overreaction o·ver·re·act intr.v. o·ver·re·act·ed, o·ver·re·act·ing, o·ver·re·acts To react with unnecessary or inappropriate force, emotional display, or violence. .'' And companies that have subscription models priced below cost will have to rely on advertising to make up the difference, Gorog said Wednesday during a conference call. He continued that Napster doesn't believe consumers ``will be excited to pay for something and be barraged by advertising.'' Yahoo declined to comment about competition with Napster. In addition to Yahoo, Napster is facing competition from Sony, MSN (1) (MicroSoft Network) A family of Internet-based services from Microsoft, which includes a search engine, e-mail (Hotmail), instant messaging (Windows Live Messaging) and a general-purpose portal with news, information and shopping (MSN Directory). and Wal-Mart. Looking ahead, Napster is pursuing the ring-tone market as a new source of revenue. The company is also working on a multimillion-dollar advertising campaign with Nestle to spread the Napster name. As for sales this summer, Napster said the summer recess at universities nationwide could slow revenue growth. For the first quarter of 2006, the company expects revenue to increase between $19 million and $21 million. Despite Napster's outlook, Munster maintained that the company has the ability to improve. ``They just need to weather the storm right now,'' he said. ``And at the end of the day they will be a survivor.'' Shares of Napster declined $1.70, or 26.8 percent, to close Wednesday at $4.65 on the Nasdaq market. Evan Pondel, (818) 713-3662 evan.pondel(at)dailynews.com |
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