Who wants to buy Napster

The online music service, once an industry renegade, is now looking for a deep-pocketed parent. Here's who might be interested in buying Napster.

Napster, once synonymous with illegal file sharing, is now legit: a public company that plays nice with the music industry and is experiencing healthy revenue growth as a result.
In fact, Napster Inc. (up $0.26 to $4.71, Charts) is one of the few Internet stocks having a good year - the stock's up more than 25 percent in 2006. But even though it is Wall Street's equivalent of a Billboard number-one hit, Napster does not have strong financials.

The company, despite strong sales growth, is expected to post a loss of 27 cents a share when it reports its fiscal second-quarter results on November 8. For the full year, which ends in March 2007, Wall Street is forecasting a loss of $1.03 a share. And Napster's profit picture isn't expected to get much better anytime soon: analysts project a loss of 83 cents a share in fiscal 2008.

So why are investors flocking to Napster like college kids circa 1999 looking for free Metallica downloads? The hope is that Napster could be the next YouTube, which cashed in earlier this month by agreeing to sell out to Google (Charts) for $1.65 billion.

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