I've posted about the margin difficulties in the digital download business before, by using Loudeye (LOUD) as a public proxy. Unfortunately, what can you really say about Loudeye's Q3 report that isn't covered in the 10Q? To summarize it:
- Negative gross margin - yes it's actually negative
- Increasing loss from previous quarter
- Decreasing revenue from previous quarter
- 6 months of cash in the bank and a "going concern" doubt
- Market delisting battle continues
- Overpeer unit accelerating downward
- Resignation of Chairman
- Retention of Allen & Co to explore strategic options
The stock dropped 38% today, but still sports a $50M+ market cap. Given that MusicNow was just sold last month to AOL by Circuit City for a rumored $15-20M, I assume a company will buy Loudeye for some amount between the MusicNow deal and the current market cap due to its European presence (OD2 acquisition) and its mobile deal with Nokia.
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