Napster (NASDAQ:NAPS) is finally showing you the money. The digital-music subscription-service provider is finally holding on to its war chest of greenbacks, posting positive free cash flow during its first fiscal quarter of 2008. It's the first time that Napster has achieved this greenery-preserving feat, but it won't be the last. The company expects an encore performance in the current quarter.

Napster's $32.3 million in revenue is a 15% improvement over last year's showing. A sharp reduction in sales and marketing expenses helped narrow losses to $0.10 per share, from a loss of $0.23 a year ago. The company is looking for $30 million in revenue for the current quarter, but don't let the sequential dip alarm you; Napster suffers a seasonal slump in its university business this time of year. It also acquired subscribers from Time Warner's (NYSE:TWX) AOL, which shut down its Music Now service earlier this year. AOL struck a deal to move its users to Napster's platform, and churn was going to be a given.  

Napster's got a lot of interesting things going on for a stock that's trading hands for roughly $3 a share these days. Now that the company is actually clinging to profits -- and growing its cash balance of $67 million -- we can somewhat safely say that half of its market cap is backed by a mattress of money.

What's so exciting about Napster these days? Well, its Napster Mobile initiative is taking off. The company is growing the number of wireless carriers that offer its smorgasbord of music streams in monthly subscription packages. It's not generating the kind of convergence buzz that Apple (NASDAQ:AAPL) is getting with its iPhone, but you don't see Apple trading as a penny stock.

Unless it's Apple-flavored, digital music doesn't seem to be on Wall Street's radar these days. Stocks like Sirius (NASDAQ:SIRI) and RealNetworks (NASDAQ:RNWK) are also trading in the single digits. It's a pity. Apple may have sold 3 billion songs through iTunes, but it's not the only way we're consuming our digital tracks these days.

It's understandable that Napster might attract skeptics. However, now that it's in the middle of stringing together at least a pair of quarters with positive cash flow, bears are best advised to keep their chuckling to a minimum.

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Longtime Fool contributor Rick Munarriz is a huge music fan, but with subscriptions to both satellite radio services, he hasn't made the move to tack on a digital music subscription service as well. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy is wide awake.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.