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RealNetworks Up 12% But Music Lags

Real "We achieved solid results in the second quarter," Rob Glaser, CEO of RealNetworks. said during the company's report to Wall Street yesterday.  "We also launched a major initiative -- Music Without Limits -- that substantially strengthens Rhapsody by integrating mobile music and legal mp3s from all major labels."

But despite a major new partnership with MTV and Verizon, music has thus far failed to do much to help the company's bottom line. For the second quarter of  '08, revenue grew 12% to $152.6 million compared with $136.2 million for the second quarter of 2007. But music revenue grew a mere 1% to $37.2 million. Overall ReaNetworks posted a net loss...

for the second quarter of $1.3 million or  compared with net income of $1.3 million in the second quarter of 2007.

Real's revenue growth  came from a 40% increase in Games revenue to $34.9 million, of which $4 million was due to the acquisition of TryMedia; a 15% increase in Media Software and Services revenue to $29.2 million; a 5% increase in Technology Products and Solutions revenue to $51.3 million; and the 1% increase in music revenue.

Gross margin was 64% in the second quarter of 2008, consistent with the gross margin a year earlier. Operating expenses for the second quarter of 2008 were $109.7 million, compared with $92.1 million in the second quarter of 2007. Operating expenses in the second quarter of 2008 included $9.2 million of related party advertising in Rhapsody America.