RealNetworks Fourth Quarter Profits Tank

RealNetworks’ profits tanked during the recent fourth quarter due to a reduced payout schedule from Microsoft. Towards the end of 2005, RealNetworks negotiated a $761 million, out-of-court antitrust settlement with Microsoft which buoyed the company’s profit line while masking their mediocre earnings. Now that the payouts are diminishing, the real profitability story is emerging.

During the fourth quarter, settlement payouts totaled $60.9 million, drastically down from $434.4 million during the year-ago period. The result was a profit of $39.3 million, down from $295.6 million during the fourth quarter of 2005. But overall revenues topped $125.6 million, a 50.3 percent jump from year-ago totals of $83.6 million. And RealNetworks counted music-related revenues of $33.6 million during the period, up 21 percent from the comparable quarter last year.

On an annual basis, the revenue picture also showed gains. For the recent year, revenues topped $395.3 million, up 17.8 percent over 2005 figures. On the music side, revenues also jumped, hitting $123 million, also an increase of 21 percent. According to the company, those figures helped to establish RealNetworks as a “clear number two in revenue in the overall digital music market.” Meanwhile, music subscribers also gained, both in the fourth quarter and year, thanks to the acquisition of South Korea-based mobile music backend provider WiderThan.

Author: FutureMusic

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