Audible a Hail Mary

It was another hollow quarter at Audible (Nasdaq: ADBL  ) . The leader in the digital delivery of spoken-word content posted a narrower fourth-quarter loss last night. Revenue soared 27.6% higher to hit $23.3 million, but growing the top line has never been a problem for Audible.

It is surprising. The knock on Audible has been that its model's simplicity opens the door for competitors to swoop down and nibble away at Audible's turf of digital audiobooks and programming, but it hasn't really happened. It has kept its potential enemies close by striking partnerships with companies like Apple (Nasdaq: AAPL  ) , Amazon.com (Nasdaq: AMZN  ) , and XM Satellite Radio (Nasdaq: XMSR  ) .

That keeps the subscribers coming. The company landed another 70,400 AudibleListener members during the quarter. The digital-streaming offering now has 383,000 members, most of them paying for access to Audible's growing library of more than 35,000 titles that they can play back on the computers or on portable devices.

The only thing that hasn't been coming is black ink.

"We expect the results of our efforts will be stronger profitability in 2007 and beyond," CEO Donald Katz notes in last night's report, but one has to ask: stronger than what? Audible hasn't turned a profit since its 2004 fiscal year and has an accumulated deficit of nearly $140 million.

The company is blessed with a cash-rich balance sheet, but all three major analysts with published 2007 estimates expect the company to stay in the red this year.

Opinions can change. They probably should, in fact. The company's loss of $0.03 a share for the December quarter was less than half the shortfall that those same analysts were braced for. As long as the audio hounds keep coming and Audible keep its overhead in check, 2007 might very well be the year in which Audible goes back in black.

For more Foolish reading:

Many were introduced to Audible in the November 2003 issue of Hidden Gems, when Audible was placed on Tom Gardner's watch list as a promising $70 million company. Amazon.com is a popular recommendation for Motley Fool Stock Advisor subscribers. XM was a Rule Breakers newsletter selection in 2005 but was bumped off at a steep loss 13 months later.

Longtime Fool contributor Rick Munarriz believes that it is better to be heard than seen -- if you're an audiobook. He does not own shares in any of the companies in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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