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
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
Unless it's Apple-flavored, digital music doesn't seem to be on Wall Street's radar these days. Stocks like Sirius
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.