MP3.com Shatters Earnings Estimates



MP3.com Inc. floored analysts Wednesday by reporting fourth-quarter earnings that far exceeded expectations, indicating that the company should have little problem delivering on its promise of reaching profitability this year. Company execs attributed the results to strong ad sales and continued growth of both its subscriber base and its stable of artists supplying content.

Having estimated a per-share loss of 13 cents for the quarter, ended Dec. 31, analysts were clearly impressed that the company registered a per-share loss of just 5 cents. Robertson Stephens analyst Sasha Zorovic, who called the quarter "remarkable," says the company is ideally positioned now that it has become an ally to the major music labels rather than an enemy. Zorovic says the labels' acknowledgement that they're not up to the technological task of managing and distributing music online plays right into MP3.com's hands.

Speaking to analysts and reporters, CEO Michael Robertson alluded to that by stressing that the company's plan to establish itself as the center of an industrywide "music interoperating system" is built around its growing status as a technology provider. Robin Richards, president and chief operating officer, said the company's technology strategy will be expanded in 2001. "This year we plan to turn our unique technology into a profit center," he said.

Jupiter Research analyst Aram Sinnreich says Robertson has always pushed the company as a technology enabler. "What he's said, basically, is 'I know what you need more than you know what you need, and when you figure out that you need it, I'll be here.' " Sinnreich expects growing demand for MP3.com's technology expertise to reduce the company's reliance on advertising.

For the fourth quarter, MP3.com reported a loss of $3.1 million, or 5 cents a share, on revenue of $22 million. That compares with a loss of $10.7 million, or 17 cents a share, on revenue of $15.3 million last year. For the year, MP3 reported a loss of nearly $23 million, or 34 cents a share, on revenue of $80.1 million, compared with a loss of $36.4 million, 67 cents a share, on revenue of $21.9 million last year.

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