Napster posts second-quarter loss

LOS ANGELES (Reuters) - Online music service Napster Inc on Wednesday posted a narrower second-quarter loss, helped by subscriber growth.

Napster posted a net loss of US$13.6 million, or 32 US cents a share, compared with a net loss of US$15.3 million, or 44 US cents per share in the year-ago quarter. Revenues of US$23.4 million compared with US$9.3 million.

Analysts on average had forecast Napster to post a second quarter loss of 47 US cents and revenues of US$21.7 million.

For the second quarter ended 30 September, the total number of Napster paid subscribers grew to 448,000. For the quarter ended 30 June, paid subscribers, excluding university subscribers, totaled 402,000. It was unclear if the latest second quarter subscriber figure included university subscribers.

For the third quarter, Napster expects subscriber growth to increase significantly, but revenue to be about flat sequentially, as revenue in the second quarter of fiscal 2006 included a one-time contribution from a hardware promotion with BellSouth.

The online music service competes against services such as RealNetworks, Rhapsody and Apple Computer's iTunes.

"Revenues slightly exceeded guidance and they didn't burn through as much cash as I expected," said Kit Spring, an analyst with Stifel Nicolaus.