NEW YORK (CNNfn) - Online music company MP3.com Inc. posted a narrower-than-expected second-quarter operating loss Monday, but its net results sank further into the red amid a raft of legal woes.|
The San Diego-based company, which allows users to download music from the Internet, lost $5.2 million, or 8 cents per diluted share, for the three months on a pro forma operating basis, compared with a loss of $6.3 million, or 22 cents per share, in the year-earlier quarter. The results exclude one-time charges.
The operating results beat the First Call consensus estimate of analysts, which called for a loss of 13 cents per share.
During the quarter, MP3.com lost a federal lawsuit filed by an industry group that claimed the company provided access to copyright material through its My.MP3.com service. The company has settled lawsuits with Warner Music Group (whose parent company is Time Warner Inc., which also is the parent of CNNfn) and Bertelsmann AG's BMG, and is in settlement talks with other music companies.
The company recorded a charge of $150 million in the quarter to cover legal costs associated with the lawsuits. Including this charge and other special items, the company's net loss fell to $177.1 million, or $2.71 per share, compared with a net loss of $6.3 million, or 22 cents per share, in the 1999 period.
Second-quarter revenue soared to $20.2 million, from $1.9 million in the 1999 period. Most of MP3.com's revenue comes from advertising, but the company is trying to expand its revenue stream with other services including a subscription system for classical music.
"Notwithstanding the difficult challenges during the last quarter, as well as adverse Internet market conditions, we achieved solid top-line growth, said Chairman and Chief Executive Michael Robertson.
The company has about 515,000 songs available on its Web site representing more than 81,000 artists and record labels.
MP3.com (MPPP: Research, Estimates) shares closed down 1/16 at 12-1/16 prior to the release of the earnings report. In after-hours trading, the stock gained 1-3/16 to 13-1/4.
MP3.com stock has been hit hard by the Internet shakeout on Wall Street; sinking from a 52-week high of 105. The stock is up from a year-long low of 6-1/2.
For the first six months of the year, MP3.com lost $13.7 million, or 21 cents per diluted share, on a pro forma operating basis, compared with a loss of $7.75 million, or 27 cents per share, in the year-earlier period.
First-half revenue totaled $37.7 million, from $2.58 million for the first six months of 1999.