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RealNetworks gains on strong 2Q results

Real Networks Inc. (Nasdaq: RNWK) shot up 7 11/16, or 10 percent, to 85 1/2 Wednesday, one day after it topped analysts' estimates in its second quarter.

Real Networks almost broke even a quarter ahead of expectations.

The provider of software for streaming media posted a net loss of $270,000, or virtually break even, on a per share basis. First Call's survey of 10 analysts predicted a loss of 2 cents per share for the quarter ended June 30.

On Wednesday, BancBoston Robertson Stephens reiterated its "buy" rating on the stock.

"We are reiterating our Buy rating on RealNetworks," said analyst John Powers. "The company reported revenues of $28 million, exceeding our estimate by $2.9 million, and up from $15.1 million during the same period last year. In our view, technology adoption grew well sequentially."

Powers also bumped RealNetworks fiscal 1999 earnings estimate from 1 cent a share to 7 cents a share and raised fiscal 2000 estimates from 15 cents to 24 cents a share.

The $28 million in sales represented an 86 percent gain from $15.1 million in the year-earlier period, when RealNetworks lost $2.6 million, or 4 cents a share. Software licenses, which make up the bulk of RealNetworks' business, went up 87.6 percent, to almost $20.3 million from just shy of $10.8 million in the second quarter of 1998. Service revenue increased 64.8 percent over the same period to nearly $5.8 million, from $3.5 million.

The company's flagship RealPlayer viewer now has more than 70 million users, a 159 percent increase from 27 million a year ago. RealNetworks' latest product, the RealJukebox, has picked up 5 million users since the release of its beta version 10 weeks ago.

Advertising gained 165 percent year-over-year to $2 million from $765,000. The company's RealGuide saw an 85 percent sequential increase in daily page views, said Rob Glaser, RealNetworks chairman and CEO. RealNetworks' website now ranks 12th in Internet reach, up from 15th, Glaser said, citing surveys from Media Metrix.

Nine of the 10 analysts following the stock maintain either a "buy" or "strong buy" recommendation.>