Stock Watch: Q2 Loss, Analyst Downgrades Sink Liquid Audio

Liquid Audio, Inc. (Nasdaq: LQID) fell 2 1/2 to 6 3/4 Tuesday, as a series of analyst downgrades followed the company’s report of a wider loss for the second quarter.

The Redwood City, California-based company, which provides software and services for the delivery of music over the Internet, said revenue rose to $3.5 million from $745,000 a year earlier, as the loss before items widened to $7.1 million, or 32 cents per share, from $4.3 million, or 21 cents, in the same quarter last year.

The net loss in the latest quarter amounted to $7.7 million, or 35 cents per share. The company had $144 million in cash and short-term investments at quarter’s end, down from $157.8 million at the start of the year.

Analysts at Robertson, Stephens & Co. and US Bancorp Piper Jaffray downgraded the stock after the news. Robertson Stephens analyst Alex Baluta cut his rating on Liquid Audio to long-term attractive from buy, saying he expects the stock to trade near current levels for the next several quarters.

“We believe that the company should have a strong platform position once music downloads take hold,” Baluta said.

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