Napster falls in wake of 4Q report

Shares of the Los Angeles-based company fell 21 cents, or 12.4 percent, to $1.48. In the past year, the stock has traded between $1.33 and $3.80.

Napster said late Wednesday that its fourth-quarter loss narrowed as it added subscribers. The company predicted first-quarter revenue slightly below analysts' expectations and relatively flat earnings per share, compared with analysts' predictions for a per-share loss.

In a note to analysts, BMO Capital Markets analyst Leland Westerfield lowered his price target to zero, saying it was rounded down from an estimate of 44 cents, while keeping his "Market Perform" rating for the stock.

Westerfield said Napster's fourth-quarter revenue of $30.8 million and loss of 10 cents per share missed his projections.

He added that Napster's Tuesday launch of an MP3 download store selling tracks free of copy protection points toward an ongoing effort to shift its business model toward a mix of paid MP3 downloads and music subscriptions.

Still, he said the launch "does not repair deeply concerning fundamentals" he sees in the company's subscriber music service and doesn't "patch conspicuously rising liabilities for music royalty and content rights."

Meanwhile, Canaccord Adams analyst Steven B. Frankel kept his "Sell" rating and $1.25 target price for the stock. Frankel said in a client note that the company "continues to burn cash" and the new copy protection-free MP3 download store Napster launched this week "is not enough to derail the iPod/iTunes juggernaut."