Napster Inc. today (April 5) raised its quarterly revenue forecast for the second time in about a month, citing a big jump in subscribers and stronger-than-expected sales of music downloads, sending i

Napster Inc. today (April 5) raised its quarterly revenue forecast for the second time in about a month, citing a big jump in subscribers and stronger-than-expected sales of music downloads, sending its shares nearly 15% higher.

The company said it expects revenue for the fourth quarter ended March 31 of $16.5 million to $17.5 million, up from about $15 million. Analysts, on average, were expecting sales of about $14.6 million, according to Reuters Estimates.

One analyst cautioned that the company was following a pattern of being conservative with its sales outlook, and then raising its forecasts. "This is no different than the last several quarters," said Steven Frankel, an analyst with Adams Harkness Inc., who rates Napster shares "reduced"' and believes the stock is overvalued. "This is more a function of conservative guidance than anything else."

Los Angeles-based Napster, which has yet to become profitable, carries the highest price-to-sales ratio of the five stocks in the S&P Home Entertainment Index, at 4.47. Apple Computer Inc., viewed as a highflyer, trades at a price-to-sales ratio of 2.47.

Napster said it ended the fiscal fourth quarter with more than 410,000 subscribers, adding 143,000 during the period, representing sequential subscriber growth of more than 53%.

The company said its "Napster to Go" marketing campaign helped to spur the growth in subscribers, and pay-per-download music purchases helped push sales higher. The "Napster to Go" service allows consumers to fill portable digital music players with an unlimited amount of music instead of incurring per-song charges.

The company on March 3 raised its revenue outlook to $15 million from a prior forecast of $14 million

Shares of Napster rose 88 cents, or 14.3%, at $7.05 on the Nasdaq.

--Reuters