Napster Inc. (NDAQ:NAPS) announced yesterday that it was hiring UBS AG to assist the Board of Directors in reviewing strategic alternatives, which could include a sale of the company. The company noted that this decision came as a result of unnamed third parties that expressed interest in a possible business combination or acquisition. In the press release, the CEO noted:

"Our goal is to enhance shareholder value which could potentially lead to a new strategic partnership or the sale of the company but in any event our primary focus will remain on growing Napster."

The CFO also highlighted the company's strong financial position:

"Napster has a strong balance sheet with a healthy cash position of $97 million as of the close of the first quarter and we are currently generating annual revenues in excess of $100 million."

While the company certainly is not cheap by traditional measures, it does have some things going for it. With the new flurry of new products and deals in the music industry, many were expecting this kind of consolidation. The online music market is only going to grow, and Napster has a strong brand name and a large customer base. The stock is currently up over 15% on the news. As of now, we can only speculate on a buyout price; however, any future announcements will come in the form of a press release or 8K filing with the SEC - this stock is definitely one to keep an eye on!

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