Loudeye In Reverse LOUDD, SVVS
A reverse split won't save Loudeye. The company did a 10-1 reverse on May 23 in the hope of maintaining its listing on Nasdaq. The company had 132.6 million shares before the action.
In the nine months before the reverse split occurred, the company's stock dropped from $1.14 to $.35. Eighteen months ago, it traded for over $2.50. On an adjusted basis, the company now trades at $2.91, or about $.29 pre-reverse.
Recently, Loudeye sold it's music download business to Muze, Inc. for $11 million in cash. The company needs the money. According to the Loudeye 8-K on the event, the businesses it has sold were about 22% of revenue in 2005.
Loudeye continues to be a basket case. In the March 31 quarter, the company lost $4.6 million on $8.4 million in revenue. Gross profit was only $2 million, or 24%.
Loudeye and a former division are being sued by Savvis (SVVS) for early termination of a contract. The amount of that suit is $1.6 million.
In February, the company did a private placement of 16.5 million shares and 12.375 warrants at $.68 (all before the reverse split). Given the price of the stock today, the warrants will probably not be exercised any time soon.
Based on historical data, Loudeye's quarterly expenses are about $6.8 million. With a gross margin of less than 25%, the company would have to reach revenue of over $27 million a quarter to breakeven. Not likely.
Providing software and services for digital media stores is highly competitive. Part of the reason is that all the companies in this business are up against iTunes. The other is that the price charged to end customers continues to drop.
It does not look like Loudeye will make it out of this room alive.
Douglas A. McIntyre
In the nine months before the reverse split occurred, the company's stock dropped from $1.14 to $.35. Eighteen months ago, it traded for over $2.50. On an adjusted basis, the company now trades at $2.91, or about $.29 pre-reverse.
Recently, Loudeye sold it's music download business to Muze, Inc. for $11 million in cash. The company needs the money. According to the Loudeye 8-K on the event, the businesses it has sold were about 22% of revenue in 2005.
Loudeye continues to be a basket case. In the March 31 quarter, the company lost $4.6 million on $8.4 million in revenue. Gross profit was only $2 million, or 24%.
Loudeye and a former division are being sued by Savvis (SVVS) for early termination of a contract. The amount of that suit is $1.6 million.
In February, the company did a private placement of 16.5 million shares and 12.375 warrants at $.68 (all before the reverse split). Given the price of the stock today, the warrants will probably not be exercised any time soon.
Based on historical data, Loudeye's quarterly expenses are about $6.8 million. With a gross margin of less than 25%, the company would have to reach revenue of over $27 million a quarter to breakeven. Not likely.
Providing software and services for digital media stores is highly competitive. Part of the reason is that all the companies in this business are up against iTunes. The other is that the price charged to end customers continues to drop.
It does not look like Loudeye will make it out of this room alive.
Douglas A. McIntyre
posted by douglas mcintyre at 1:42 PM
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