Will RealNetworks (Nasdaq: RNWK) ever make a lot of money when it's not whacking Microsoft (Nasdaq: MSFT) with a pinata stick?

Last night's quarterly report shows that the company behind the RealPlayer media-streaming application, the RealArcade casual games site, and the Rhapsody music subscription service is growing nicely, but still barely profitable.

Revenue soared 25% to $156.9 million in the fourth quarter, though a chunk of that came from the company's recent acquisition of South Korean ringtone specialist WiderThan. Earnings per share fell to $0.02 a share, but the $0.22 a share it earned a year ago was mostly the handiwork of a favorable antitrust settlement against Mr. Softy.

The future? Eh. RealNetworks is looking to post a small loss in 2008, with the top line inching ahead by somewhere between 8% and 11%.

RealNetworks is still fumbling for a high-margin model that the market can get behind. The company has plenty of friends in high places, having teamed up with Viacom (NYSE: VIA) and Verizon (NYSE: VZ) to beef up its music-subscription offering. Yahoo! (Nasdaq: YHOO) will be sending its own music-service subscribers to Rhapsody now that it's bowing out, leaving only Napster (Nasdaq: NAPS) as a rival for that particular crown.

You're still sitting down, aren't you?

That's the problem with RealNetworks. It's hard to get excited about a company that relies more on interest income than operating income to turn a profit. Sure, it's great to see a company that has more than $3 a share in cash trading for less than twice that sum, but where's the pizzazz? Nobody wants to buy into a risk-laden money market fund.

The company put $350 million of its greenbacks to work a year ago with the WiderThan deal, but now that we enter 2008 on an apples-to-apples basis, even the hot ringtone market feels uninspiring.

Sooner or later, RealNetworks will have to take a stand. It'll have to make a material acquisition of a high-margin new-media upstart, or radically restructure its operations to make its current moving parts more profitable.

Move the needle for a change, RealNetworks. Please.

For more Foolishness: