CDnow loss widens on tripled revenue

The company posts $34.6 million in revenue for the quarter, well ahead of last year's revenue of $11.6 million.

2 min read
Online music store CDnow posted a widened second-quarter loss of $22.9 million, or 76 cents a share, but nearly tripled its revenue compared to the same time last year.

The company posted $34.6 million in revenue for the quarter, well ahead of last year's revenue of $11.6 million. In the year-ago quarter, CDnow lost $8.9 million, or 55 cents per share.

Last year's figures do not include revenue from N2K, with which CDnow merged in March.

This quarter's reported loss does not include the company's various merger-related expenses. Including those expenses, the company posted a $31.7 million loss, or $1.06 per share. Analysts had expected the company to report a loss of 78 cents a share, according to First Call.

The earnings report comes three weeks after the company announced that it was merging with the Columbia House music club. CDnow included expenses from that merger as well as the earlier merger with online rival N2K in the report.

Over the past year, CDnow has faced increasingly intense competition from e-commerce leader Amazon.com in the online music space, and has turned to mergers and acquisitions as a key element of its competitive strategy. The Seattle e-tail giant dominated the online music market during the second half of 1998; the company has declined to release its music sales figures this year.

In addition to its merger strategy, CDnow has looked to digital downloads as a way of strengthening its site. This fall, the company plans to open an online store where customers can purchase downloadable songs and albums.

Amidst all of the red figures for the company, CDnow did find some positive news. The company said it added 332,000 customers during the second quarter, bringing its total customer base to about 2.4 million. And, according to the company, repeat customers accounted for 66 percent of the company's product-related revenues in the quarter.

N2K lost $16.4 million, or $1.18 per share, on $10 million in revenue during the second quarter of 1998.

CDnow shares closed down 0.375 to 15.875.