This week's news moving tech stocks includes today's (Tuesday's) Pandora Media Inc. (NYSE: P) earnings report, tomorrow's (Wednesday's) Apple Inc. (Nasdaq: AAPL) iPad debut, and Yahoo Inc.'s (Nasdaq: YHOO) rumored layoffs.
Pandora Media (NYSE: P) Earnings: Internet radio site Pandora, which went public June 15 last year, released fourth-quarter earnings after the bell today.
Pandora lost $8.18 million, or five cents a share, due to higher costs for advertising, marketing and content acquisition. Fourth-quarter revenue rose to $81.3 million from $47.6 million, a 71% year-over-year increase. Advertising revenue was $72.1 million, up 74% from the year before, and subscription and other revenue was up 51% to $9.2 million.
Analysts polled by Thomson Reuters expected a quarterly loss of two cents a share on revenue of $83 million. Pandora for the past two quarters has beat market expectations, until this earnings report.
Pandora's share price has surged 42% this year, but is still below the $16 IPO price.
Investors are cautious of Pandora's user growth, afraid it'll slow and halt the soaring stock. But active users last quarter reached a record 47 million, growing 62% year-over-year, and total listener hours increased 99%.
JPMorgan analyst Doug Anmuth, who has a $22 price target on Pandora, told The Street any user growth constraints will be short-term.
"We recognize that very strong growth in usage hours driven by mobile will continue to weigh on profitability in the near term, but in the meantime, we believe that Pandora will build significant market share and that the ability to monetize mobile hours will improve over the next few years and drop down to the bottom line," Anmuth wrote in a research note earlier this month.
Pandora got a 5.5% boost Monday after Stifel Nicolaus analyst Jordan Rohan raised his rating to "Buy" from "Hold" and gave the stock an $18 price target. Rohan said Pandora has become a "must have" application for mobile devices and is gearing up to make more money from mobile advertising.
Pandora has invested more in its ad sales force. It reported it has 5.5% of U.S. radio listener hours – up from 2.71% at the end of the previous year – which Rohan said will eventually fuel earnings growth with mobile advertising.
"While monetization lags audience in media, we believe Pandora will show vastly improved monetization this year," said Rohan.
Fans in Frenzy Over Newest Apple (Nasdaq: AAPL) iPad: Investor buzz about Apple will get even louder – can you believe that's possible? – Wednesday when the company is expected to release the latest version of its popular tablet.
The most prevalent rumors about the third iPad is that it'll boast an even faster processor than the previous models, have a high-resolution display used on the iPhone and iPod products, and be able to connect to 4G LTE networks.
Even though the official name of the newest iPad is still a secret, what we do know is the tablet will be yet another driver of Apple's soaring stock, which is on its way to $600 a share.
"We are currently modeling 48 million iPad shipments for calendar 2012. [And that] could turn out conservative," Sterne Agee analyst Shaw Wu told clients.
Apple sold about 40.5 million iPads in 2011, producing revenue of nearly $25 billion. IPad sales make up about 20% of the company's revenue base.
Apple's iPad unveiling event is scheduled for Wednesday at 10 a.m. Pacific time in San Francisco.
Yahoo! Inc. (Nasdaq: YHOO) To Slash Staff: Yahoo has already started its business makeover this year with new CEO Scott Thompson and the resignation of co-founder Jerry Yang. Now it plans to trim its workforce a bit more significantly, resulting in possibly thousands of job cuts, tech info site AllThingsD reported Monday.
Yahoo has 14,100 employees according to its last quarterly report. AllThingsD reports the layoffs will be aimed at Yahoo's products organization, public relations and marketing, research, and other marginal businesses.
As the Internet ad market continues to grow by more than 20% annually, Yahoo has been unable to increase revenues as it continues to suffer market-share losses to Facebook Inc. and Google Inc. (Nasdaq: GOOG).
Yahoo previously led the market in display advertising, with 18% of market share in 2008. But the content site slipped to 11% in 2011, while Facebook surged ahead with 14%. The loss caused fourth-quarter display ad revenue to drop 4% year-over-year from $567 million to $546 million.
"Yahoo just can't get its act together," said Money Morning Defense and Technology Specialist Michael Robinson. "While key executives were napping, Google burst on the scene a decade ago and rewrote the rules of web search and advertising. Portals like Yahoo never regained their traction. The movement in recent years to social media, where Yahoo remains a laggard, has made matters worse."
Robinson listed YHOO as a "tech stock to avoid" in 2012.
Pandora (NYSE: P) fell more than 13% in after-hours trading Tuesday after releasing fourth-quarter earnings; Apple (Nasdaq: AAPL) closed down 0.54% to $530.26 ; Yahoo! Inc. (Nasdaq: YHOO) fell 1.4% to $14.41.
News and Related Story Links:
- Money Morning:
The Three Innovations That Will Make Apple Inc. (Nasdaq: AAPL) the First $1 Trillion Company
- The Street:
Pandora's Earnings May Leave Investors Silenced
Apple looks to stay ahead of tablet race