A Napster Inc. [
NAPS] shareholder has nominated himself and two others for seats on the music subscription service provider's eight-member board of directors in an attempt to spur changes at the struggling company, according to a regulatory
filing.
Perry Rod, a 29-year-old from the San Fernando Valley who identifies himself as an independent professional investor, musician and chairman of religious organization The Paradise Project, owns only roughly 73,000 of Napster's 46 million outstanding shares. His nominees include asset manager and former investment banker
Thomas Sailors, 49, who holds 401,000 shares, and Kavan Singh, 26, an entrepreneur with roughly 9,000 shares of Napster stock.
Collectively, the three music enthusiasts and Napster customers say they want to reposition and transform the Napster brand by changing direction in product development, social networking, marketing and outsourcing. Although they don't figure to gain much traction, Napster is clearly in trouble. Never profitable, the company yesterday announced a loss of $16.5 million on revenues of $127.5 million for the fiscal year ended March 31, with its subscriber base growing by 2.2% over a three-month period. On Tuesday, it announced the
launch of a DRM-free download store that will compete with Apple Inc.'s iTunes and Amazon.com Inc.
Napster retained investment bank UBS to seek a buyer in fall 2006, but came up empty. In a research note, boutique bank Canaccord Adams maintained a "sell" rating on Napster's stock based on "
lack of a clear path to profitability," with a $1.25-per-share price target. "The launch of DRM-free MP3 tracks is not enough to derail the iPod/iTunes
juggernaught," wrote Canaccord Adams analyst Steven Frankel.
Napster shares dipped as low as $1.41 this morning, near their 52-week low of $1.33 and down roughly 85% since early 2005. -- Paul BonanosSee regulatory document filed by dissident Napster shareholdersSee May 20 post from Tech Confidential regarding Napster's DRM-free music store
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