RealNetworks reports 1Q loss as revenue declines

Digital entertainment company RealNetworks Inc. reported a larger-than-expected first-quarter loss Thursday due partly to a decline in revenue.

For the quarter that ended March 31, RealNetworks' loss totaled $12.1 million, or 10 cents per share, compared with a profit of $2.4 million, or 2 cents per share, in the year-ago quarter. In the first quarter last year, RealNetworks' results benefited from higher interest income and a $3.7 million gain on the sale of a stake in Rhapsody America.

Analysts polled by Thomson Reuters expected a smaller loss of 6 cents per share.

Revenue fell nearly 5 percent to $140.8 million from $147.6 million last year, but was in line with the $140.7 million analysts had expected.

Revenue at its games division, which includes game subscription services and sites like RealArcade.com, rose 3 percent to $32.8 million. Revenue at its music division, which includes digital music sales and subscriptions to Rhapsody and Radiopass services, rose 16 percent to $44.1 million.

But the company's technology products and services division, which sells products like media delivery software, saw revenue fall 15 percent to $43.6 million. And RealNetworks' media software and services division, which includes its RealPlayer Plus multimedia software, dropped 23 percent to $20.3 million.

The company also said that changes in foreign exchange rates cut into revenue.

RealNetworks predicted that second-quarter revenue will fall year over year and be flat or down a bit when compared wityh the first quarter. The company said it expects 2009 to be a challenging year for consumer spending, online advertising and corporate infrastructure spending.

The company also said it named John Chapple to its board. Chapple, who is president of Hawkeye Investments LLC, will take over for Jeremy Jaech, who is resigning.

Shares fell 5 cents to close earlier at $2.67.