RealNetworks shares drop as CEO abruptly quits
Just one year after taking job, Bob Kimball announces resignation following restructuring
Shares of Internet media software and services veteran RealNetworks (NASDAQ: RNWK) dropped more than 6 percent Tuesday following the unexpected resignation Monday of chief executive Bob Kimball.
It was the latest upper-management change for RealNetworks as the company struggles to compete with much larger players in the digital entertainment world.
By early afternoon Tuesday, RealNetworks shares were down 25 cents, or 6.4 percent, to 3.69 from Monday's close of 3.94.
Kimball, a longtime corporate attorney for IBM and RealNetworks, became CEO when company founder Rob Glaser, who is still chairman, resigned in January 2010.
Despite a 29 percent drop in revenue last year -- in part because the company sold off a majority stake in music service Rhapsody -- Kimball returned RealNetworks to profitability (barely) for the first time since fiscal 2007. Naturally, layoffs figure into the turnaround mix, with 85 jobs being cut last June, and another 130 RealNetworks employees -- about 10 percent of the workforce -- being let go just last month.
For his part, Glaser says he's not tempted to return as chief executive. RealNetworks EVP Mike Lunsford will serve as interim CEO until Kimball's replacement is found. Lunsford says he doesn't want the permanent gig.
So where does this leave RealNetworks? The company is something of an anomaly, a survivor from the first Internet era (Glaser, a Microsoft veteran, founded RealNetworks in 1995 as Progressive Networks) that never really grew, yet is still around. It's current market cap is about $500 million. (In comparison, Yahoo, another Internet company from that era, is worth $22 billion.)
According to the Seattle Times, RealNetworks has "developed a new online media service that may compete with upcoming products from Google and Apple." Good luck with that.
Mostly, though, RealNetworks is targeting phone companies and other business sectors as larger Internet players continue to dominate the consumer digital-media market.
It's hard to escape the feeling that RealNetworks is entering its end game. Look for someone to buy the company by next summer.
Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.