As Bloomberg reports, Napster, the original Internet music pioneer whose shares plunged a staggering 95 percent in six years, has “become takeover bait for hedge funds zeroing in on a cash hoard exceeding the company’s market value.”
It’s true: the company reportedly has $69 million in cash, but only has a market cap of $52 million at the close yesterday. The company has revamped itself several times in recent years, and has various mobile and even international media efforts in play—so far, to no avail.
“The valuation’s absolutely dirt cheap,” said Ken Smith, a portfolio manager at Munder Capital Management, in the report. “The scenario that provides the highest value for shareholders is a sale to a strategic buyer,” he said. Potential candidates include JDS as well as RealNetworks—which peddles Napster’s closest competitor, Rhapsody.