“Napster urged TV viewers to ‘Do the math!’ in a poorly-received Superbowl commercial on Sunday. But when we do the maths on Napster’s business, we discover the company lost $1.36 on every $1 it earned in the last three months. Excluding income from Roxio, which Napster now classifies as ‘discontinued operations,’ Napster had revenues of $12.1m in its Q3 2005 period, posting a loss of $16.4m,” Andrew Orlowski reports for The Register.
“The good news is that the gap is narrowing, and the company has cash and short-term investments worth $45m – enough to see the year out at the current burn rate. The bad news is that its new services require heavy promotion: the company will spend $30m alone on promoting its ‘Napster To Go’ rental service. At 20 per cent, Napster’s gross margins are healthier than Apple’s, but the Cupertino giant said it’s prepared to run its iTunes rival at break-even or at a loss. And it can afford to, given its booming iPod business,” Orlowski reports.
Full article here.