Disappointing fourth quarter guidance outweighed RealNetworks' (Nasdaq: RNWK) satisfying third quarter results; shares were chopped Wednesday as analysts downgraded the stock. WR Hambrecht & Co., however, remained optimistic on the company’s long-term prospects.
Tuesday, the provider of streaming media software and content met the consensus analyst estimate in the third quarter, but sounded alarm bells on online advertising. While overall projections for the fourth quarter and 2000 will be the same, the company said advertising revenue, which had been its fastest growing segment, would decline by 20 percent sequentially.
Shares plunged 7.19 to 14.50 in Wednesday morning trading.
The stock was downgraded to "market perform'' from "buy'' by analyst Justin Post at Deutsche Banc Alex. Brown
Analyst Nitsan Hargil at Kaufman Bros. reiterated a "buy'' rating but cut the target price to $50 from $100 per share.
WR Hambrecht &Co., which has a $62 price target on the stock said Wednesday it was maintaining a "buy" rating on the stock, but to reflect softness in the advertising market, it has trimmed its fourth quarter and 2000 revenue estimates.
"Despite an unspectacular quarter and a cautious near-term outlook, we believe that the recent sell-off in RNWK shares has been extreme. Although we cannot identify a near-term catalyst to move RNWK shares, we maintain our "buy" rating in view of the company’s long-term prospects and current valuation," stated analyst Bill Lennan in a report.
• RealNetworks meets 3Q forecasts, sees ad slowdown
• The Day Ahead: RealNetworks looks for catalyst as investors fret>