Slashdot Mirror
Roxio To Concentrate on Online Music Business
DevGhost writes "Roxio Inc. said on Monday it would change its name to Napster and focus on the money-losing online digital music service, selling its profitable CD and DVD software division to Sonic Solutions for $80 million."
This is what happens when you let an MBA run an organisation.
Norman Cook's Ode to Sl
I wonder how many of the board of that company also moved with the profitable portion of the company, leaving the employees and the unpopular directors and managers with the loss making portion?
Board member #1: "Hey, let's sell our profitable division so that we can focus on one that will never make money ever."
Board Member #2: "Brilliant!"
Napster on the stock ticker... who would have thought that was going to happen 5 years ago?!
2) Focus on money losing division
3) ???
4) Profit!
I like their moxie!
Adaptec != Roxio. Adaptec sold their EZ-CD Creator cd-burning software to Roxio, but they aren't the same company.
Hokey statistics and ancient misconceptions are no match for a good thought in your head, kid!
Board Member #3: ??????
Board Member #4: "Profit!"
would be to get Apple together with Toast and Jam. Hopefully, Steve will gobble them up. It makes me hungry just thinking about the possibilities...
Read the fuckin' summary. The CD/DVD burning division -- which makes DirectCD and the AWESOME toast application -- is profitable. Meaning, it makes profit.
Roxio is SELLING the profitable part of their business to concentrate on the stuff that's not working.
Why? Because they're dumb.
Hey freaks: now you're ju
What if Microsoft bundles a DVD/CD - burning program with LongHorn? Then this might not be such a bad idea for Roxio. The software is great but if microsoft is playing the browser-war with burning software then its potentially a good thing for the ROxio company.
Also to consider are new DRM rules. Roxio could have to do major upgrading to the software to enable proper DRM and even then Microsoft/MPAA could decide its not good enough.
What is a great product now does not mean that it will always be the best. You have to admit that CD/DVD burning software is kind of a one-trick-pony-kind-of software that does not have great potential for growth. Sooner or later Microsoft will start to integrate burning capabilities like Apple.
Also another thing to consider is with growing HD sizes CD burning I am assuming is decreasing. also with MP3 players, which I am assuming will lead to MP3 car players, CDr's could potentially.. gasp.. die. Leaving ROxio with a sinking ship.
Just some thoughts as to why they would do this drastic move
They probably need to invest gobs of money in their unprofitable operations to get them to turn a profit. Their options were
* Loan a bunch of money from banks or private investors, on the strength of your profitable unit.
* Sell the profitable unit for a lump sum many times its annual profit and invest in in the online business.
* Sell off the unprofitable unit and let it die.
They've retained the final option (they can always decide to fire everybody, though that's not cheap), and they've got a handfull of cash (no strings attached, unlike bankloans or investors) AND the assets of the online business so they don't even have to start a business from scratch to invest it in.
If it all makes sense depends greatly on what their plans are with the cash they've just earned, and the premium of getting a was of cash over other means of investment. It's still likely their online business will die, but if it does, it won't drag the profitable business down into Chapter 11. Possibly saving jobs.
What it comes down to is that the company thought it's unprofitable online music business is a better investment than the profitable business. It's a high risk strategy, so likely they think the potential reward is great. Whether they're wrong, well, they're right about the risk, so we'll see.
SCO employee? Check out the bounty
James Napster, Kirk Napster and Robert Napster were all unavailable for comment at the time of going to press.
Lars Napster was available for comment (as usual) but since no-one ever listens to the loudmouth twat drummer anyway, we didn't either.
The band are about to embark on their "Going All Thrashy Again Was A Bad Career Move" World Tour 2004 to promote their new album "Yes, It Has Got A Black Cover Again But There Are A Few Ballads On It Honestly".
Their latest single "Nothing Else Still Matters" reached number 98 of the US top 100 before finally giving up trying and going home.
Gentoo Linux - another day, another USE flag.
In order to maintain the income that the CD-Burning unit provided you would only have to make 7.5% off the $80M. I'd propose that there many less risky ways to see 7.5% off $80M then trying to maintaining the profitability of 2nd rate CD-Burning software. I don't think Roxio products will ever see another $80M in profit. I'd question whoever was willing to pay $80M for a company that only makes $6M profit / year. As for focusing on Napster, it's a recognized brand and the online music market is big now and is growing.