SEATTLE, May 8 /PRNewswire-FirstCall/ -- RealNetworks(R), Inc.,
(Nasdaq: RNWK) today announced that it intends to separate its global
casual games business into an independent company and distribute shares of
the newly created games company to its shareholders. RealNetworks may
precede the spin off with an initial public offering and sale of up to 20%
of the shares of the new games company.
RealNetworks' casual games business is a leader in the casual games
industry worldwide, with a vertically integrated development, publishing,
licensing, distribution and retail business. Casual games are family
friendly and easy-to-learn but hard-to-master. Played on personal
computers, mobile devices and living room consoles, casual games include
board, word and hidden-object games and puzzles. In the first quarter of
2008, RealNetworks' games business revenue rose 33% from the first quarter
of 2007 to $31.8 million. For 2007, games revenue was $108.5 million, up
26% over 2006.
"RealNetworks was a pioneer and has been a leader in the casual games
industry since we introduced RealArcade in 2001," said Rob Glaser, Chairman
and CEO of RealNetworks. "We believe that spinning off our casual games
business will give it the best opportunity to continue to flourish and
lead."
The company anticipates that spinning off its casual games business
will result in two more flexible and focused companies. In addition, the
separation will provide the games business with an industry-specific
currency for future acquisitions and enhance its ability to attract and
retain the best talent in the industry.
"Today's announcement demonstrates our commitment to create long-term
value for RealNetworks' shareholders," said Michael Eggers, Senior Vice
President and CFO of RealNetworks. "For investors, we anticipate that the
spin off will create a pure-play casual games business with increased
transparency, and that it will result in lower complexity in understanding
and tracking RealNetworks' performance. We also think that the new
structure will provide current and potential shareholders with two
attractive investment options that may be more closely aligned with their
various investment objectives."
RealNetworks expects that either a spin off or an IPO and subsequent
spin off will be tax-free to its shareholders. In addition to a final
approval by the RealNetworks' Board of Directors, completion of the
transaction will be subject to a number of factors, including the
effectiveness of a registration statement, the receipt of a favorable
letter ruling from the Internal Revenue Service, the receipt of an opinion
of tax counsel, market conditions, the execution of inter-company
agreements and other matters.
RealNetworks expects to determine its specific course of action in time
to file appropriate documents with the Securities and Exchange Commission
by the end of the year.
Website materials
A Q&A, an 8K and this press release will be posted on special pages of
the company's website, and can be found at
http://investor.realnetworks.com/games.
Webcast and Conference Call Information
The Company will host a webcast and conference call today in
conjunction with its regular first quarter earnings call at 5:00 pm ET/2:00
pm PT. The live webcast, featuring slides and audio, will be available at
http://investor.realnetworks.com. Listeners must use RealPlayer(R) to
listen to the conference call, which can be downloaded for free at
http://www.real.com. The on-demand webcast will be available approximately two
hours following the conclusion of the live webcast. Participants may access
the conference call by dialing 800-857-5305 (773-681-5857 for international
callers).
The passcode is "First Quarter Earnings" and the leader is Rob Glaser.
A telephonic replay will be available until 8:00 pm ET on May 22, 2008, and
may be accessed by dialing 866-424-3998 (for domestic callers) and
203-369-0851 (for international callers).
ABOUT REALNETWORKS
RealNetworks, Inc. delivers digital entertainment services to consumers
via PC, portable music player, home entertainment system and mobile phone.
Real created the streaming media category in 1995 and has continued to lead
the market with pioneering products and services, including: RealPlayer(R),
the first mainstream media player to enable one-click downloading and
recording of Internet video; the award-winning Rhapsody(R) digital music
service, which delivers more than 1 billion songs per year; RealArcade(R),
one of the largest casual games destinations on the Web; and a variety of
mobile entertainment services, such as ringback tones, offered to consumers
through leading wireless carriers around the world. RealNetworks' corporate
information is located at http://www.realnetworks.com/company.
Note Regarding Games Business Financial Information. In connection with
any spin off or IPO transaction, RealNetworks intends to prepare separate,
audited historical annual financial statements and unaudited historical
quarterly financial statements for its games businesses on a stand-alone
basis. The operating results and financial data reflected in the
stand-alone financial statements of RealNetworks games business could
differ from the operating results and financial data reported by
RealNetworks on a consolidated basis in this press release due to
adjustments made during the preparation and/or audit of the stand-alone
financial statements.
Safe Harbor for Forward Looking Statements: This release contains a
number of forward-looking statements that involve risks and uncertainties.
Forward-looking statements are often identified by words such as "believe,"
"may," "will," "optimistic," "anticipate," "intend," "should," "could,"
"would," "strategy," "plan," "continue," or the negative of these words or
other words or expressions of similar meaning and include, but are not
limited to, statements regarding the following: RealNetworks' intention to
separate its games business, distribute shares of the newly created games
company to its shareholders and potentially precede the spin off with an
initial public offering and sale of up to 20% of the shares of the games
company; the anticipated benefits of the separation, spin off and IPO,
including the opportunity of the games business to flourish and lead; the
potential for the separated companies to better focus on their different
markets; the ability of each company to make future acquisitions, retain
employees and increase long-term value for shareholders; anticipated
creation of a pure-play casual games business with increased transparency
and anticipated lower complexity in understanding and tracking
RealNetworks' performance; the intended tax-free nature of the proposed
transactions; and the timing of RealNetworks' determination regarding the
structure of the transaction. These statements are not guarantees of future
performance and are subject to known and unknown risks, uncertainties and
assumptions that could cause actual results to differ materially from those
expressed or implied by such statements, including, but not limited to, the
following: the ability of RealNetworks to successfully manage and
consummate the separation, spin off and/or potential IPO process including
the risk of any delays in connection therewith or that such transactions
may not occur; the state of the financial markets; the possibility that
RealNetworks' financial results will be harmed as a result of the
separation of the games business; risks relating to the allocation of
assets and personnel between the companies; the increased expenses
resulting from such transactions; the potential for business disruption and
employee distraction during such transactions and whether or not such
transactions occur and the ability to retain and motivate key employees
during such process. More information about risk factors that could affect
RealNetworks' business and financial results are included in RealNetworks'
reports filed with the Securities and Exchange Commission including, but
not limited to, its annual report on Form 10-K for the fiscal year ended
December 31, 2007. All forward looking statements include the assumptions
that underlie such statements and are based on management's estimates,
projections and assumptions as of the date hereof. RealNetworks assumes no
obligation to update any such forward looking statements or information.
A registration statement relating to shares to be sold in an IPO, if
applicable, will be filed with the Securities and Exchange Commission. Such
registration statement has not been filed or become effective. The shares
of the games business may not be sold and offers may not be accepted prior
to the time such registration statement becomes effective. This release
does not constitute an offer to sell or the solicitation of any offer to
buy any securities and there shall not be any sale of any securities of the
games business in any state in which such offer, solicitation or sale would
be unlawful prior to the registration or qualification under the securities
laws of any such state.
RealNetworks, RealPlayer, Rhapsody and RealArcade are trademarks or
registered trademarks of RealNetworks or its subsidiaries.
See Also
