Napster says music cell phones will save company

Napster, Inc. (Nasdaq: NAPS), the formerly notorious music-sharing company that now bills itself as “the most popular on-demand music subscription service in the world,” is positioning itself to become the leading content provider for music-enabled cell phones, CEO William Gorog said in a conference call after the close of Wednesday’s trading.

“We have never had greater excitement,” Gorog said on the call. “We believe our base of on-demand music subscribers is greater than all other on-demand subscription services combined.”

In the first quarter of 2008 ending June 30, the company expects revenues of $31 million, from $28.1 million the prior year, on improved gross margins and lowered operational expenses, CFO Nand Gangwani said on the call. The company predicts a net loss between $6 million and $7 million, or $0.14 a share, Gangwani said. This would be an improvement on the first quarter 2007 loss of $9.8 million, or $0.26 a share.

CEO Gorog forecasted an industry shift from standalone MP3 players to music-enabled cell phones.

“In 2008, music-enabled cell phones will easily eclipse sales of MP3 players,” Gorog said. “In the near future, most consumers will own a portable device that is compatible with Napster.”

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