Pop Music Review

EMusic.com Inc., one of the first online music firms to roll out a subscription-based service, reported Wednesday a staggering $191-million loss for its fiscal second quarter, primarily because of charges and accounting adjustments tied to its acquisition of Tunes.com.

The loss comes mostly from a $173-million charge, an adjustment to reflect both the value of Tunes.com’s assets and the change in value in the price of EMusic’s stock that it used to pay for the deal.

EMusic bought Tunes.com, an online music publishing venture, in February 2000.

“It’s an official recognition that EMusic overpaid for Tunes.com, but there’s no money going out of their bank account because of it,” said Phillip Leigh, a digital media analyst with Raymond James.

Excluding the charge, the Redwood City company reported a pro forma second-quarter net loss of $8.7 million, or 21 cents a share. That marked a small increase over EMusic’s pro forma net loss of $8.4 million, or 28 cents, for the second quarter a year earlier.

EMusic missed Wall Street predictions of a loss of 20 cents a share for the quarter, according to First Call/Thomson Financial.

Revenue for its second quarter was $4.7 million, up from $2.8 million. The company had total assets of $46.1 million as of Dec. 31.

EMusic Chief Executive Gene Hoffman, who told analysts the company will lower its cash burn rate to less than $4 million a quarter, said the company also will take a $1-million charge in restructuring costs in the current quarter.

EMusic stock fell 3 cents to 47 cents Wednesday on Nasdaq.

At a Glance

Other technology-sector earnings, excluding one-time gains or charges unless noted, include:

* Ask Jeeves Inc. reported a fourth-quarter loss that was larger than projected because of what the company described as weak online shopping in December and a conservative policy toward recognizing dot-com sales. The Internet search service, which in December laid off a quarter of its staff and warned of a larger-than-expected fourth-quarter loss, said its loss widened to $18.7 million, or 53 cents a share, from $15 million, or 55 cents, a year ago. Analysts were expecting a loss of 52 cents, according to First Call/Thomson Financial. Revenue climbed 111% to $23 million.

* Cheap Tickets Inc.’s profit fell 34% in the fourth quarter to $534,000, or 2 cents a share, on increased advertising spending. Revenue rose 16% to $18.4 million. Analysts on average were expecting earnings of 1 cent.

* Electronic Data Systems Corp. said operating earnings increased 15% in the fourth quarter to $331.7 million, or 70 cents a share, beating analyst forecasts by 2 cents. The computer services company’s revenue rose 6% to $5.2 billion, better than the $5.1-billion average estimate of analysts. The quarter marked a record high in new contracts of $15.8 billion, up 41% from a year earlier, spread across all EDS’ main businesses. EDS said it expects to continue growing in line with Wall Street estimates for this year.

* Lantronix Inc., which makes technology that connects devices to the Internet, reported operating income of $706,000, or 2 cents a diluted share, compared with $866,000, or 2 cents, a year ago, matching expectations. Revenue rose 9.2% to $12.5 million at the Irvine-based company.

* NetZero Inc., provider of free Internet service, reported a wider-than-expected loss for its fiscal second quarter and warned of weak revenue in the third quarter, due to weakness in online advertising spending. The Westlake Village-based company said its loss widened to $33.5 million, or 29 cents a share, from $24.4 million, or 27 cents, a year ago. Analysts on average had expected a loss of 25 cents. Revenue rose 31% to $16 million, and the company said revenue might not grow beyond that level in the second quarter. Analysts expected revenue of $17.1 million for the second quarter and $21.5 million for the third period, according to First Call/Thomson Financial.

NetZero also said the company would introduce NetZero Platinum, a $9.95 high-quality pay Internet service without ad banners, later this quarter to diversify its revenue base.

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Bloomberg News and Reuters contributed to this report.