Rob Glaser, RealNetworks chairman

RealNetworks today announced a series of moves to “reinvigorate” the business and make the 16-year-old Seattle company more attractive to investors.

It plans to return $136 million to investors in a special dividend and execute a one-for-four reverse stock split, an initiative that comes after a four month “top-to-bottom review” of the businesses, said founder and chairman Rob Glaser. It also released disappointing earnings report and told analysts that it plans to name a new CEO by the end of the summer.

RealNetworks has seen its stock decline 65 percent in the past five years. But Wall Street seemed impressed with the plan, sending Real’s stock up more than eight percent in after hours trading.

In a press release, Glaser noted that the moves would help reposition the distributor of games and provider of digital media infrastructure technologies. Glaser said:

“We have completed the first phase of that analysis and are now putting together what we believe to be a very compelling strategy and plan to reinvigorate RealNetworks and to set the company up for renewed growth. As part of this analysis, we believe that the company has excess cash relative to our anticipated future operational or strategic needs Accordingly, we are choosing to return some of this cash to shareholders. After the payment of this dividend, we expect to retain sufficient capital to pursue growth both through new product introductions and acquisitions.”

RealNetworks has been a company in transition for a number of years, and this special dividend and reverse-stock-split is the latest chapter.

The company’s previous CEO, Bob Kimball, unexpectedly stepped down as CEO in March. It spun off the Rhapsody online music service last year, and has contemplated doing the same with its games business.

Real is currently being led by interim CEO Mike Lunsford, but he said in a conference call today that the CEO should be completed this quarter.

RealNetworks reported a net loss of $6.8 million on revenue of $83.8 million for the quarter. That was a six percent drop in revenue for the quarter

It had $327 million in cash and cash equivalents as of June 30th, though that that cash pile will be reduced once the special dividend is declared on August 23rd. Here’s a closer look at Real’s results for the quarter.

 

 

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Comments

  • Guest

    Kudos and best wishes to RealNetworks in their continued fight!

  • RobGtheFleecer

    So, Real has a total of 136MM shares outstanding. Rob Glaser owns 49MM shares. So isn’t Rob just voting to liquidate the company’s cash to the tune of $49MM for his own benefit?!!

    Nice fleecing there Bobby boy!

    By the way, it’s VERY interesting to me that Zillow and Real have the exact same Market Cap right now at ~$470MM

    • Guest

      I’m not sure of the voting structure but these things usually require a board vote and rob doesn’t have more than one seat to my knowledge, so it must have been something others on the board agreed with. Many companies give dividends and since Real is valued at 470m with 330m in cash in the bank one could argue this is a benefit for all shareholders, Rob included. Shareholders can always sue if they believe something nefarious is going on. So I wouldn’t say he doing something wrong. This isn’t a commentary on the company in general or Rob in general, just the notion that providing a dividend is a bad thing or hurtful to other shareholders.

      • Gross

        Pa-lweeze! Rob, as Chairman, has enormous influence on “who” gets a Board seat. Think about it – over 1/3 of the “dividend benefit” is for Rob alone. I’d say “fleecing” is the right term . . .

        • Gross

          AND, he gets a massive payout while the company tanks. Heads he wins, tails you lose.

      • Doh

        His vote is counted as a shareholder based on his % of ownership. In other words if you are dumb enough to be shareholder Rob is F ing you right now.

        • Guest

          I still don’t understand how returning cash to shareholders is a bad thing given the valuation of the company. Given the company’s poor operating performance over the last 5 years. Breaking it up into pieces and returning cash seems like the best move. Currently, the operating business is worth almost nothing but it does have assets that would be valuable. The games division in particular given the price paid for PopCap is something that could fetch a decent valuation. Perhaps not the 7.5x of PopCap, but even that 3-4x it would be work as much as real is by itself. Sure, Rob is benefiting from this but he should, he is the largest individual shareholder. But that doesn’t mean it is “fleecing” or bad for other shareholders. It is probably the best return any real shareholders have seen in a long time and that is a pretty sad thing to say but it might be true. real is the company that ‘could have been’ on some many levels.

          • New Radio

            The problem is that Real’s businesses are flagging, they don’t have a good roadmap, and they are totally lacking direction. So, rather then giving it back they should be investing it to grow the company.

            This is pretty much a “throw in the towel” move.

          • Guest

            Well, I don’t disagree. I wouldn’t exactly say it is throwing in the towel since there is 100m+ available to grow the games business (likely the one with the most potential right now). If GameHouse is spun out and executes it can raise capital from private equity funds. Real has a poor track record to driving returns for shareholders when they re-invest in their businesses, so giving some back is actually the right thing for shareholders even if it is a throw in half the towel move. It isn’t unusual for companies with a lot of cash to give back dividends, Microsoft did it a while back, and Verizon did it recently. For whatever reason investing back into the businesses haven’t resulted in much for Real shareholders so why throw good money after bad.  Like I said, it is sad – but not sure it is a case of Rob “fleecing”. I mean from an ego perspective I’m sure he’d like the vindication of Real doubling in value or the Games business acquired like PopCap. Either of those scenarios would result in more money for him too. Breaking up all these business and turning them into independent companies, empower people, attract talent, and hopefully capture a little start-up spirit may be the only thing left to do. I’m being a realist here.

    • RobGthelefty

      That’s because he has to help Obama get re-elected.  Glaser spends more time giving money to the same people who know nothing about the economy, job creation and want to overregulate and overtax than he does figuring out how to make Real work

  • Anonymous

    Wow that sure is a lot of cash dude.
    http://www.web-privacy.au.tc

  • Sammysam

    Just another way for Glaser to pay himself.

  • Digitaljason

    Glaser gets paid 42M for running this company into the ground.   Real had a HUGE lead in several catagories and didn’t take advantage of a single one.  The most recent-Spotify is in the process of destroying Rhapsody.  Nice.

    • Guest

      But he owns those shares so he has every right to the money, even if everything you say is true. I mean Pandora is going to have a billion dollar plus valuation – why doesn’t Rhapsody? It is actually spooky how many opportunities Real had and floundered but he owns what he owns and there is no governance mechanism for taking away his ownership for poor performance. Life ain’t fair. Maybe Rob should start a VC fund in Seattle – he clearly could spot trends but let other folks execute with some distance.

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