Changes Is Good

On Monday Napster issued a press release, which got great pick-up, stating that it was gonna try to parlay the scant $97 million it has in the bank, the mirage of increasing traffic and a brand which is still incredibly popular with geriatric investment bankers, into a windfall for senoir management and a modest return for investors. In the press release company CEO, Chris Gorong, who owns about 700k shares of the companies stock, which at todays close ($4.01) is worth about $2.8 million, said that his company intends to “thoughtfully examine potential combinations that may further enhance Napster’s unique strategic and brand position in the center of digital media.” In other words, they’re gonna pretend they’re still relevant, collect as many offers as they can and sell while big media companies are in an acquisitive mood. Dump it fella’s, sell for as much as you can.

There has been lots of talk about this, with AP and Reuters warming over the press release and El Reg and ArsTechnica dissecting it. A quick look at the financials shows that the company aint so hot. Its market cap is only about $180 million which is roughly twice what they have in the bank, meaning prior to Monday’s announcement investor thought Napster was pretty much worth what it had in the bank. Now that the pig has slapped on some lipstick, investors are feeling a bit more giving. Real Networks by comparison has a market cap more then 4 times its cash in the bank.

For buyers lusting after the nostalgia value of Napsters brand is ready to deal. But buyer beware, along with the cool logo and great cocktail party banter comes a COO who takes home $308k a year, a Prexy that gets $311k a year and a CFO who rakes in $305k. Add on top of that 31 marketers and 41 corporate staffers and your got the recipe of a real headache. One last fun fact from the Napster financials, there are over 821,000 Napster stock options priced at between $8.45 and $16.00 floating around in the world right now. If your one of the lucky few to own one of these water logged gems please leave a comment here or email me.