Roxio plans to sell its software division to Sonic Solutions in a transaction valued at $80 million, then change its name to Napster, focusing solely on selling digital music.
Roxio makes Toast Titanium CD and DVD burning software and Jam audio mixing software for the Macintosh, as well as Easy Media Creator and other titles for Windows.
The company revealed its plans when posting its quarterly financial results this week, although the deal is subject to the customary regulatory and shareholder approval.
Tackling ITunes
The move will allow the company to focus its efforts on the burgeoning online music market, says Chris Gorog, Roxio chairman and CEO. He expects the $80 million transaction will significantly boost Roxio/Napster's net cash position, an important competitive advantage for the company, which has struggled against Apple's domination of the online digital music market with its ITunes Music Store service.
Roxio purchased Napster out of its bankruptcy almost two years ago. The company relaunched the music site as a paid service.
Since then, Roxio has been aggressive about partnerships and promotions, such as pushing its digital music service to students.
Financial Boost
Roxio posted $29.9 million in net revenue for its first quarter of fiscal 2005, which ended June 30, 2004. That's compared to $24.2 million for the same quarter a year ago. Roxio's net loss for the quarter was $2.6 million, or 8 cents per share, compared to a net loss of $370,000 or $0.02 per share for the same quarter a year ago. That's considerably better than Roxio's prior guidance of 26 cents per share and ahead of analysts' expectations too.
Roxio hopes to finalize the sale of its software division in the fourth calendar quarter of 2004.
The comparatively favorable earnings news and Roxio's plans to focus solely on Napster seems to have been well received by investors--Roxio's stock was up 7.49 percent at 4.45 in after hours trades.
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