CDNow missed analysts' estimates for the second quarter in row Tuesday, posting a loss of $28.2 million, or 92 cents a share, on sales of $43.6 million.
A survey of analysts by First Call Corp. predicted it would lose 88 cents a share in the quarter.
Ahead of the earnings report, CDNow (Nasdaq: CDNW) shares closed off 7/16 to 4 3/16.
In the year-ago quarter, the online music retailer lost $19.1 million, or 96 cents a share, on sales of $21.9 million.
Including a variety of charges, it lost $37.8 million, or $1.23 a share, in the quarter.
Company officials announced a new operating plan designed to trim operating expenses by more than $12 million a quarter, hoping to make itself more attractive for a potential suitor.
However, it said the reduction in spending to acquire new customers will result in second- and third-quarter sales below this quarter's mark.
In the quarter, advertising sales fell to $3 million from $3.4 million in the fourth quarter.
Last quarter, CDNow missed analysts' estimates, dropping $25.7 million, or 85 cents a share, on sales of $53.1 million.
CDNow came under further scrutiny in March when Barron's reported it had less than one month of cash remaining.
CDNow shares hit a 52-week high of 23 1/4 in July before falling to a low of 3 in April.
Two of the three analysts following the stock rate it a "hold."