EXHIBIT 99.1
FOR IMMEDIATE RELEASE
REALNETWORKS FILES ANTITRUST LAWSUIT AGAINST MICROSOFT
SEATTLE, December 18, 2003 - RealNetworks(R), Inc. (NASDAQ: RNWK) announced
today it has sued the Microsoft Corporation for violations of federal and state
antitrust laws. The complaint was filed in federal court in San Jose,
California and alleges that Microsoft has illegally used its monopoly power to
restrict competition, limit consumer choice and attempt to monopolize the
growing field of digital media.
The complaint alleges that Microsoft has pursued a broad course of
predatory conduct over a period of years by abusing its monopoly power,
resulting in substantial lost revenue and business for RealNetworks. For
example, the complaint alleges that Microsoft has used its monopoly power to
restrict how PC makers install competing media players while forcing every
Windows user to take Microsoft's media player, whether they want it or not.
"While we much prefer competing in the market - as we are doing and have
done for 9 years -- our Board has made a carefully considered business decision
to take this action to end Microsoft's illegal conduct and recover substantial
damages on behalf of our shareholders," said Rob Glaser, Chairman and CEO.
Glaser added, "Despite Microsoft's tactics, RealNetworks has continued to
innovate and diversify, and we will continue to do so. Over the last five
quarters, we've successfully grown our business as a whole by introducing
exciting new products and services, and we're on track for our sixth straight
quarter of revenue growth. However, we believe our business would be
substantially larger today if Microsoft were playing by the rules."
As of the end of the third quarter, RealNetworks had more than 1.15 million
subscribers to its paid content services, including more than 250,000 in the
digital music category led by the award-winning Rhapsody Internet jukebox
service. RealNetworks' subscriber counts have continued to grow robustly in the
fourth quarter - indeed, RealNetworks is projecting that by the end of this year
it will have over 1.3 million
paying subscribers to its premium digital media subscription services, including
a 40% jump during the quarter for its premium digital music services to over
350,000 subscribers. Moreover, RealNetworks is bringing digital media services
to consumers' mobile devices around the world via partnerships with the leading
mobile phone operators, handset device makers, chipset manufacturers and content
creation companies.
"We believe Microsoft's conduct is illegal, and that conduct has prevented
us from competing solely on the merits of our products," said Bob Kimball,
RealNetworks' Vice President and General Counsel. Mr. Kimball continued, "Our
case is based on many of the same types of Microsoft conduct that U.S. courts
have already declared to be illegal - such as failure to disclose interface
information and imposing restrictions on PC makers - as well as a broad course
of additional predatory conduct. RealNetworks is seeking substantial damages
that could well exceed a billion dollars, in addition to injunctive relief to
prevent future illegal conduct by Microsoft."
RealNetworks expects the cost of the litigation for 2004 to be
approximately $12 million, in addition to approximately $1.5 million relating to
the litigation this quarter. Typically, litigation of this type takes about
three years through trial. Despite the added legal expenses for the fourth
quarter of 2003, RealNetworks expects to meet the guidance provided in its
October 28 earnings release based in large part on the continued growth of its
premium subscription services.
Excluding the Microsoft litigation costs, RealNetworks expects a net loss
per share for the fourth quarter to be in the range of ($0.02) to ($0.03) on
revenue between $52 and $56 million. Including the Microsoft litigation
expenses for the fourth quarter, RealNetworks expects the GAAP net loss per
share for the fourth quarter to be in the range of ($0.03) to ($0.04).
RealNetworks expects to provide quarterly disclosure of the cost of this
litigation.
RealNetworks has retained the law firms of Bartlit Beck Herman Palenchar &
Scott, the Summit Law Group, and McManis Faulkner & Morgan to represent it in
this lawsuit. RealNetworks' law firms have years of experience in complex
antitrust and technology cases. Bartlit Beck is a firm of trial lawyers known
for its successful trial work on behalf of a broad range of Fortune 500
companies in complex antitrust and
technology cases. Similarly, the Summit Law Group represented Caldera in its
successful antitrust case against Microsoft.
RealNetworks' lawsuit is complementary to the European Commission's
antitrust investigation of Microsoft and RealNetworks will continue to cooperate
and support the European Commission's efforts.
ABOUT REALNETWORKS, INC.
RealNetworks, Inc. is the leading creator of digital media services and
software. Consumers use RealNetworks' RealOne Player and the content
subscription services it offers to play free and premium digital content.
Broadcasters, network operators, media companies and enterprises use
RealNetworks' products and services to create and deliver digital media to PCs,
mobile phones and consumer electronics devices. Consumers can access and
experience audio/video programming and download RealNetworks' consumer software
at http://www.real.com. RealNetworks' systems and corporate information is
located at http://www.realnetworks.com.
RealNetworks, and Rhapsody are trademarks or registered trademarks of
RealNetworks, Inc. All other trademarks are the property of their respective
owners.
LEGAL NOTICE REGARDING FORWARD-LOOKING STATEMENTS: This release contains
forward-looking statements, including statements regarding the cost, potential
damages, success and duration of the Microsoft antitrust litigation, the ability
to demonstrate or recover damages relating to the litigation, estimated earnings
and revenue for the fourth quarter of 2003, RealNetworks provision of services
for mobile handsets, continued innovation and diversification and other factors
that may affect future earnings or financial results. Actual results could
differ materially from those projected in such forward-looking statements.
Factors that could cause actual results relating to the litigation to differ
from those indicated in the forward-looking statements include the following:
the risk that litigation is an inherently complex and uncertain process, so it
cannot be predicted with accuracy whether RealNetworks will ultimately prevail
on its claims, nor the amount of time and monetary and other resources that it
will take to resolve the claims; the possibility that Microsoft may make
counterclaims against RealNetworks or take other actions in reaction to
RealNetworks' claims that could prove damaging to RealNetworks; even if
RealNetworks does prevail on its claims, the remedy that is awarded cannot be
predicted with certainty. Factors that could cause actual results relating to
RealNetworks' operations to differ from those indicated in the forward-looking
statements include the following: whether the costs of litigation may be greater
than anticipated; and whether the litigation might adversely impact
RealNetworks' reputation and relationships with current and potential customers
and business partners. Additional information concerning factors that could
cause our actual results to differ materially from those contained in the
forward-looking statements can be found in RealNetworks' filings with the
Securities and Exchange Commission ("SEC"), including but not limited to the
most recent reports on Forms 10-Q and 10-K, which identify important risk
factors that could cause actual results to differ from those contained in the
forward-looking statements. Copies of filings made with the SEC are available
through the SEC's electronic data gather analysis and retrieval system (EDGAR)
at www.sec.gov. RealNetworks assumes no obligation to update the forward-looking
statements included in this document.
For more information
Media contact: Greg Chiemingo, 206-892-6234, gchiemingo@real.com
Investor contact: Erika Shaffer, 206-892-6191, eshaffer@real.com