Napster to explore putting itself up for sale
Online music service Napster said on Monday that it hired UBS Investment bank to help it look at strategic alternatives, which could include the sale of the company.
Shares of Napster surged 11 percent. “Our goal is to enhance shareholder value, which could potentially lead to a new strategic partnership or the sale of the company, but in any event our primary focus will remain on growing Napster,” said Chris Gorog, Napster chief executive in a statement.
The company said the move was in response to what it said was “recent third-party interest.” The Los Angeles-based company said it has not set a timetable for completing the evaluation. Napster early last month posted a narrower quarterly loss but said its subscriber base fell from the prior quarter as it had focused on promoting a new free Web site.
Napster said in the quarter ended June 30, it has a paid subscriber base of 512,000, down 7 percent from 606,000 in the prior quarter. The company had a net loss of $9.8 million, or 23 cents per share, for the first fiscal quarter, narrower than a year-ago loss of $19.9 million, or 46 cents per share. Revenue rose to $28.1 million from $21 million.
Napster, originally an online song-swapping service, was forced to close in July 2001 after a series of legal battles over copyright infringement. It relaunched as a legal download site in 2003, having been bought by software company Roxio. Shares of Napster fell 6 cents, or 1.7 percent, to $3.55 on Nasdaq. In extended trade, the stock climbed to $3.95.