Rosetta Stone reports steady revenue

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Earnings: Rosetta Stone Inc, Arlington

THE TAKE: Language learning company Rosetta Stone held revenues steady in the third quarter, as U.S. sales rose 5 percent but international consumer revenue fell 8 percent. International revenues declined 8 percent, mostly because of lower sales in Japan and Germany, offset by an increase in sales in Korea through the home shopping channel. Institutional sales were down 6 percent mostly because of the non-renewal of Army and Marines contracts, which were partly offset by increased sales in corporate and international. Loss for the quarter widened to $33.1 million, primarily because of a $25.6 million non-cash charge to establish a valuation allowance against its deferred tax assets $1 million in costs related to its lawsuit against Google. Without those items, the net loss would have been $1.7 million, compared with $1.2 million during the third quarter of 2011.

Revenue: Total revenue for the quarter remained steady at $62.2 million
Net loss: Loss widened during the quarter to $33.1 million from a loss of $1.2 million in the third quarter of 2011.
Earnings per share: Loss of $1.58 per share, compared with a loss of 6 cents per share a year ago
Special items: Non-cash charge of $25.6 million to establish a valuation allowance against its deferred tax assets (“DTAs”) primarily in the United States.

Steve Swad, president and CEO of Rosetta Stone, said, “We had a good third quarter with bookings up 9 percent year-over-year with double-digit growth in our consumer business and single-digit growth in our institutional business. We also did a better job managing our expenses, and we made progress shifting the business online with over 57,000 consumer Online Learners and over 80 percent of our institutional business online.”

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