Yahoo Inc's steeply discounted foray into online music subscriptions struck a sour note on Wednesday with the shareholders of Napster Inc and RealNetworks Inc -- the owners of the rival services that stand to lose the most from the new competitive threat.
Napster's shares plunged US$1.70, or 26.8 percent, to close at US$4.65 on the NASDAQ Stock Market, where RealNetworks' shares fell US$1.54, or 21.1 percent, to US$5.76.
Yahoo's entrance into the music downloading business even hurt Apple Computer Inc, which runs the dominant online music store with more than 400 million songs sold since it opened two years ago.
Apple's shares fell US$0.81, or 2.2 percent, to US$35.61 on the NASDAQ, even though industry analysts say the firm is far less vulnerable to Yahoo's aggressive push than Napster and RealNetworks.
Napster chairman Chris Gorog sought to reassure investors as US$69 million of his company's market value evaporated on Wednesday.
"We think there has been a significant overreaction in the market," Gorog told analysts during a Wednesday conference call. "Our customers have not fled in the past when desperate pricing moves have been made by competitors."
Echoing the sentiment of many analysts, Gorog predicted Yahoo will raise its prices within a few months, relieving the financial pressure on Napster. He also is counting on a consumer backlash to the ads that Yahoo will serve up with its music service.
Los Angeles-based Napster has been struggling financially, even before Yahoo entered the fray. After the stock market closed on Wednesday, Napster announced it lost US$24.3 million during the first three months of this year, while its revenue rose to US$17.1 million from US$6.1 million a year ago. The company expects to lose another US$27 million to US$28 million in its current quarter.
Wednesday's stock market reaction reflected a wide belief that Yahoo's music subscription service, introduced on Wednesday, will force Napster and RealNetworks to either lower their prices or risk losing subscribers. Either scenario would make it more difficult for Napster or RealNetworks to make money.
Yahoo appears better positioned than Napster or RealNetworks to absorb the costs of a potential price war. Yahoo ended March with US$1.1 billion in cash compared with US$370 million at RealNetworks and US$170 million at Napster.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
CHINA POLICY: At the seventh US-EU Dialogue on China, the two sides issued strong support for Taiwan and condemned China’s actions in the South China Sea The US and EU issued a joint statement on Wednesday supporting Taiwan’s international participation, notably omitting the “one China” policy in a departure from previous similar statements, following high-level talks on China and the Indo-Pacific region. The statement also urged China to show restraint in the Taiwan Strait. US Deputy Secretary of State Kurt Campbell and European External Action Service Secretary-General Stefano Sannino cochaired the seventh US-EU Dialogue on China and the sixth US-EU Indo-Pacific Consultations from Monday to Tuesday. Since the Indo-Pacific consultations were launched in 2021, references to the “one China” policy have appeared in every statement apart from the
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from