Pandora Sins Against The World On Earnings (P, SIRI)

Pandora Media, Inc. (NYSE: P) appears to have missed the mark on earnings with a wider loss than what was expected.  Revenues grew 71% in the fourth quarter to $81.3 million. The net loss per share was -$0.05 EPS, but the non-GAAP report used by analysts was shown as -$0.03 EPS.  Thomson Reuters had estimates of -$0.02 EPS on $83.06 million.

The company further reported that its active users reached a record 47 million users, showing growth of 62% year-over-year.  Pandora ended the fourth quarter with $90.6 million in cash, cash equivalents and short-term investments.

We also have guidance…Revenue is expected to be $72 million to $75 million with a non-GAAP net loss of -$0.18 to -$0.21 EPS.  Estimates are $86.6 million and a loss of only -$0.02 EPS.  For the year (fiscal 2013), Pandora sees revenue of $410 million to $420 million with a non-GAAP loss of -$0.11 to -$0.16 EPS.  Estimates for the year are $0.01 EPS on $418.3 million in sales.

Pandora’s content costs are rising.  For a web radio player with a $2.3 billion pre-earnings valuation, this is just not going to cut it.  Shares closed down 2.6% at $14.27 and the after-hours move has shares down about 13% at $12.50 in active trading.

If Pandora is really going to be a threat against Sirius XM Radio Inc. (NASDAQ: SIRI), you just would never know it by looking at these numbers.  For a comparison: SIRIUS is worth $8 billion, its coming fiscal sales are supposed to be $3.35 billion, it is profitable and expected to remain profitable.

JON C. OGG