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RealNetworks Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 9, 2012 03:29PM

RealNetworks Inc. (RNWK) filed Quarterly Report for the period ended 2012-06-30. Realnetworks Inc has a market cap of $270.4 million; its shares were traded at around $8.04 with and P/S ratio of 0.8. Realnetworks Inc had an annual average earning growth of 25.5% over the past 5 years.



Highlight of Business Operations:

For the six months ended June 30, 2012, our total consolidated revenue declined by $38.6 million, compared with the year-earlier period. The reduction in revenue resulted from a decline of $17.9 million in our Core Products segment, a decline of $16.9 million in our Games segment, and a decline of $3.8 million in our Emerging Products segment, due to the factors described above. Gross margin declined to 60% from 63% compared with the year-earlier period primarily due to certain costs of revenue that do not decrease in direct proportion to decreases in revenue, particularly in our SaaS business. Operating expenses improved by $8.9 million for the six months ended June 30, 2012, compared with the prior year period due primarily to reduced personnel and related costs of $8.7 million, a decline in restructuring costs totaling $4.1 million, and reduced marketing expenses of $3.4 million. These declines were partially offset by an expense accrual of $2.4 million we recorded in the quarter ended March 31, 2012 associated with the then-pending investigation by the Washington State Attorney General’s Office, which was resolved through a consent decree entered into in the quarter ended June 30, 2012. In addition, operating expenses in the six months ended June 30, 2011 were favorably impacted by a benefit of $6.4 million related to an insurance reimbursement for previously settled litigation that reduced expenses for that period.

Total Games revenue decreased by $7.9 million in the quarter ended June 30, 2012, compared with the year-earlier period. Lower revenue from license sales and our subscription products contributed $3.6 million and $2.4 million, respectively, to the decline during the period. The decrease in license revenue reflected a decrease in the number of games sold through our games syndication services of $1.6 million, as well as lower sales of mobile games of $1.2 million. Lower subscription revenue was a result of fewer subscribers compared with the year-earlier period.

Total Games revenue decreased by $16.9 million for the six months ended June 30, 2012, compared with the year-earlier period. Lower revenue from license sales and our subscription products contributed $7.7 million and $5.5 million, respectively, to the decline during the period. The decrease in license revenue included a decrease in the number of games sold through our games syndication services of $3.5 million, as well as lower sales of mobile games of $2.3 million. Lower subscription revenue was a result of fewer subscribers compared with the year-earlier period.

Service revenue decreased by $32.5 million for the six months ended June 30, 2012, compared with the year-earlier period. The decline was primarily due to reduced service revenue from our SaaS offerings of $14.0 million, lower sales of our subscription products of $9.0 million, lower advertising revenue of $4.1 million, and lower revenues related to the distribution of third-party products of $3.9 million.

For the six months ended June 30, 2012, cash provided by investing activities of $110.9 million was due to the net cash proceeds of $116.4 million received from the sale of certain patents and other technology assets to Intel Corporation, and cash proceeds of $4.2 million related to the sale of certain equity and other investments, offset in part by purchases of equipment, software and leasehold improvements totaling $5.0 million, and purchases, net of sales and maturities, of short-term investments of $4.7 million. The net cash proceeds from the sale of certain patent and other technology assets to Intel Corporation were invested in liquid securities in the U.S.

Read the The complete Report



Stocks Discussed: RNWK,
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