Over the past few months, Roxio (NASDAQ:ROXI) has widened its role in online music. Unfortunately, that's not the only thing that's getting chunky. Last night, the company posted a wider deficit of $0.43 a share on an 18% dip in second-quarter revenue.
The market wants to like you, Roxio, so why are you playing so hard to get? The digital media specialist is getting ready to launch a legal -- read "pay" -- version of Napster next week. By acquiring the struggling yet established pressplay service to smoothen out the learning curve of subscriber-based downloads, it also has Sony (NYSE:SNE) and Vivendi's (NYSE:V) Universal Music Group as willing cheerleaders and investors. Those were two sound moves and tactfully orchestrated at vulture-pecking prices.
Along with Apple (NASDAQ:AAPL), which has already had a successful start as a digital song file peddler, Roxio should have been the one-two punch to save the recording industry from oblivion.
They had the proper anti-establishment pedigree. Apple's "Rip, Mix, Burn" campaign pissed off the labels and Roxio's Easy CD Creator software has been a popular choice for millions of illegal MP3 downloaders -- and that one honest kid in Duluth.
But while Roxio's shares have quadrupled over the past year, it still doesn't get it. It's still doling out an overly generous amount of its stock in the form of employee stock options and it's bleeding red at a time when investors favor some fiscal harmony in their music.
What's the deal, Roxio? You've got a great song to sing. Now you just have to learn to sing it in tune.
