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RealNetworks Inc. Reports Operating Results (10-Q)

August 09, 2010 | About:
10qk

10qk

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RealNetworks Inc. (RNWK) filed Quarterly Report for the period ended 2010-06-30.

Realnetworks Inc. has a market cap of $388.17 million; its shares were traded at around $2.87 with and P/S ratio of 0.69. Realnetworks Inc. had an annual average earning growth of 53.3% over the past 5 years.RNWK is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates.

Highlight of Business Operations:

During the quarter ended June 30, 2010, we reorganized our business and operational structure as part of our strategy to simplify, restructure and grow our business. Our restructuring activities included the elimination of approximately 85 positions, including approximately 25% of our executive ranks, and reduced our use of office space in Seattle and Europe. As a result of these changes, we recorded restructuring charges of $11.9 million for the quarter ended June 30, 2010, of which $4.8 million primarily related to the reduction in force and $7.1 million was recorded as a loss on excess office facilities.

In the quarter ended June 30, 2010, our total revenue declined 35%, or $46.8 million, to $88.9 million compared with $135.7 million in the quarter ended June 30, 2009. The decline was due primarily to the absence of any revenue in our Music segment due to the deconsolidation of our Rhapsody joint venture, which accounted for approximately $40.5 million of the decrease. Also contributing to the overall reduction were declines in revenue from our TPS and Games segments totaling $5.1 million and $1.6 million, respectively. Revenue in our TPS segment declined due to a reduction in professional services contracts and a combination of several market and subscriber-based factors that reduced SaaS-derived revenue. Our Games segment is continuing to face increased pricing pressures as well as a shift in the marketplace towards online social games. We recorded net loss attributable to common shareholders of $25.9 million for the quarter ended June 30, 2010 compared with a net loss attributable to common shareholders of $188.3 million for the year earlier period. Net loss attributable to common shareholders for the prior year quarter was primarily impacted by a goodwill impairment of $175.6 million. See Results of Operations-Revenue by Segment below for further explanations of changes in our segment revenue for the quarter ended June 30, 2010.

Our operating expenses for the quarter ended June 30, 2010, declined 70%, or $191.6 million, compared with the year-earlier period. The decline in operating expenses resulted primarily from a $175.6 million impairment of goodwill recorded during the quarter ended June 30, 2009, as well as the deconsolidation of our Rhapsody joint venture that accounted for $11.9 million of the decrease. Although we reduced operating expenses, we continued to invest in research and development of new and existing products. Cash, cash equivalents, restricted cash and short-term investments declined to $323.2 million from $398.6 million at December 31, 2009, principally due to uses of cash related to Rhapsody, including the restructuring, and ordinary course fluctuation in working capital. See Liquidity and Capital Resources below for further explanation of uses of our cash.

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10qk
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