RealNetworks sees big charges for fourth quarter

Digital music specialist says charges could hit $227 million to $249 million, adding that there's "no visibility" on when it might spin off a games company.

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A born browser of dictionaries and a lifelong New Englander, Jon Skillings is an editorial director at CNET. He honed his language skills as a US Army linguist (Polish and German) before diving into editing for tech publications -- including at PC Week and the IDG News Service -- back when the web was just getting under way, and even a little before. For CNET, he's written on topics from GPS to 5G, James Bond, lasers, brass instruments and music streaming services.
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RealNetworks said Tuesday that it now expects fourth-quarter revenue of between $151 million and $153 million.

In October, RealNetworks had said it expected fourth-quarter revenue in the range of $150 million to $157 million. Analysts on average have been expecting revenue of about $153.8 million, according to Yahoo Finance.

The revised figure compares with the $157 million in revenue that the digital music company reported in the year-earlier period and would be roughly even with the $152 million logged in the third quarter of 2008.

RealNetworks also expects to report fourth-quarter charges of $227 million to $249 million, about $6 million of which is related to a workforce reduction and plans to spin off a games company. In December, Real said it would lay off about 130 employees, or 7.5 percent of its staff, along with cutting 30 contract positions.

Regarding the games spin-off, the company said Tuesday: "While Real still intends to create a separate games company, there is no visibility as to when conditions will support separation. As a result, the company has postponed work with outside advisors, has stopped external spending on the transaction and will write off the capitalized costs in the fourth quarter."

The bulk of the fourth-quarter charges--$185 million to $200 million--reflect the impairment of goodwill and acquired intangible assets, Real said.

RealNetworks plans to report actual fourth-quarter earnings February 12.