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RealNetworks' profits pass muster

The provider of media streaming software tells investors to expect similar sales and earnings in the second quarter.

RealNetworks met analysts' profit estimates in its first quarter Tuesday, earning $3.5 million, or 2 cents a share, on sales of $50.4 million.

First Call pegged the provider of media streaming software for a profit of 2 cents a share on sales of $51.3 million in the quarter.

RealNetworks shares closed off 16 cents to $8.59 ahead of the earnings report before moving up to $9.25 in after-hours trading.

The $50.4 million in sales marks a 6 percent decline from the year-ago quarter when it posted sales of $53.5 million. The $3.5 million profit marked a 60 percent decline from the $8.8 million, or 5 cents a share, it pocketed in the year-ago period.

"Given the challenging economic environment, these results are satisfactory," said Chief Executive Officer Rob Glaser during a conference call with analysts. "But they're hardly a cause for celebration."

Including a variety of goodwill and acquisition-related charges, RealNetworks posted a net loss of $24.4 million, or 15 cents a share in the quarter.

Systems sales accounted for $26.6 million in sales this quarter, or 53 percent of total sales. Consumer sales checked in at $18.3 million, or 36 percent of sales, while advertising chipped in $5.5 million, or 11 percent of total sales.

John Graves, an analyst at SG Cowen, pegged RealNetworks for a profit of 2 cents a share in the quarter on sales of $51.6 million.

"RealNetworks' franchise value is significant considering it has more than $250 million in annual sales," he said. "But we don't see much happening with the stock or its peers for a while. They're all feeling the pain."

Company executives said it now has more than 200 million unique registered users of its RealPlayer software, up 73 percent from 116 million users in the year-ago quarter.

Looking ahead, Chief Financial Officer Paul Bialek told investors to expect second-quarter sales and earnings to be in line with the first quarter's.

First Call consensus pegged RealNetworks for a profit of 2 cents a share on sales of $57 million.

Last quarter, RealNetworks met analysts' reduced estimates when it pocketed $3.9 million, or 2 cents a share, on sales of $58.2 million.

Its shares moved up to a 52-week high of $59.50 in July before falling to a low of $5 in March.

Thirteen of the 24 analysts tracking the stock maintain a "hold" recommendation.