Roxio sheds software development to focus on Napster
Responding to the opportunity that digital music offers, Roxio Inc., parent of Napster, is selling its software division to focus on the music business. As an indication of its new focus, Roxio is changing its name to Napster. Roxio acquired Napster last year and has moved aggressively to erase the outlaw image of the music downloading service and to create a multi-channel retail strategy.
Roxio reports that for the quarter just ended, Napster’s revenue reached $7.9 million and included $1.1 million from hardware sales of MP3 players to partners. Operating loss, before restructuring, amortization and stock based compensation, was approximately $8.1 million.
Roxio ended the quarter with $63.4 million in cash, restricted cash and short-term investments, which it reports ahead of forecasts.
Roxio will sell its software division to Sonic Solutions for $80 million. It had revenue of $22 million in the quarter just ended and net income of $6 million.
"The planned sale of our software division will allow us to focus all of our efforts on Napster and the fast-growing online music market," said Chris Gorog, chairman and CEO. "This transaction will significantly enhance our balance sheet resulting in a net cash position well in excess of $100 million, which will support our efforts to drive subscriber growth and accelerate Napster`s competitive position."
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