Radio Wars: Pandora Says it's Beating Sirius, Apple in Battle For Listeners

NEW YORK (TheStreet) -- Pandora (P) said Tuesday that it has retained the title as the top music-streaming service for at least another month, according to audience metrics the company released Tuesday.

The online radio station said it posted an 8% month-over-month and 18% year-over-year increase to 1.47 billion hours of content for October. Its share of U.S.-based radio listening totaled 8.1%, an increase from 7.8% in September and 6.6% in October 2012, according to the Oakland, Calif.-based company.

Pandora streamed a total 1.47 billion hours of content over the month, up from 1.25 billion a year earlier. Strong growth over the past two months is tied to the company's lifting of a 40-hour free monthly mobile listening cap on Sept. 1.

However, the number of active listeners was lower since September, falling 1.8 million to 70.9 million, as competitors chip away at the giant's dominance. Active listeners remained strong on a year-to-year basis, up 20% from 59.2 million in October last year.

Strong growth in listeners comes in spite of Apple (AAPL) launching its rival service iTunes Radio mid-September. Though the Cupertino-based company hasn't released metrics, CEO Tim Cook said at the company's iPad event last month that iTunes Radio had attracted 20 million listeners four weeks after launch.

Addressing a Morgan Stanley conference on Monday, Pandora's CFO Michael Herring a portion of the funds raised in a September stock offering will be invested in expanding its international footprint. The Oakland, California-based company currently operates in the U.S., Australia and New Zealand, albeit with broadcasting restrictions depending on each country's laws. Earlier in October, Apple said it was planning to launch its service in overseas markets including the U.K., Canada and Oceania by early 2014.

Rival streaming broadcaster Sirius XM (SIRI) had a total 25.6 million paid subscribers in the quarter ended Sep. 30, 9% higher than a year earlier. Customers who had signed up for paid and unpaid trials grew 3.7% to 6.9 million.

Pandora shares jumped 9.1% to $28 and Apple dipped 0.24% lower to $525.51, while Sirius XM suffered 2% to $3.71.

TheStreet Ratings team rates Pandora Media INC as a Sell with a ratings score of D. The team has this to say about their recommendation:

"We rate Pandora Media INC (P) a SELL. This is driven by several weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 43.8% when compared to the same quarter one year ago, falling from -$5.42 million to -$7.79 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, Pandora Media INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$2.32 million or 181.48% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Pandora Media INC's earnings per share declined by 33.3% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, Pandora Media INC reported poor results of -23 cents a share vs. -10 cents a share in the prior year. This year, the market expects an improvement in earnings (3 cents vs. -23 cents).
  • 42.71% is the gross profit margin for Pandora Media INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -4.94% is in-line with the industry average.

TheStreet Ratings team rates Apple Inc as a Buy with a ratings score of A-. The team has this to say about their recommendation:

"We rate Apple Inc (AAPL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AAPL's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • AAPL's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.40, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has slightly increased to $9,908 million or 8.45% when compared to the same quarter last year. In addition, Apple Inc has also modestly surpassed the industry average cash flow growth rate of 7.06%.
  • 41.78% is the gross profit margin for Apple Inc which we consider to be strong. Regardless of AAPL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AAPL's net profit margin of 20.04% compares favorably to the industry average.
  • APPLE INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, Apple Inc reported lower earnings of $39.63 a share vs. $44.16 a share in the prior year. This year, the market expects an improvement in earnings ($43.44 vs. $39.63).

TheStreet Ratings team rates SIRIUS XM RADIO INC as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate SIRIUS XM RADIO INC (SIRI) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues rose by 10.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has increased to $302.24 million or 37.49% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.12%.
  • The gross profit margin for SIRIUS XM RADIO INC is rather high; currently it is at 65.01%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.54% trails the industry average.
  • Compared to its closing price of one year ago, SIRI's share price has jumped by 34.46%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • SIRIUS XM RADIO INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SIRIUS XM RADIO INC increased its bottom line by earning 53 cents a share vs. 7 cents a share in the prior year. For the next year, the market is expecting a contraction of 86.8% in earnings (7 cents vs. 53 cents).

More from Markets

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO

Video: One-on-One With Pluralsight's CEO Following Its Successful IPO

CBS-Viacom Battle Comes to a Head; FDA Approves Novartis Migraine Drug --ICMYI

CBS-Viacom Battle Comes to a Head; FDA Approves Novartis Migraine Drug --ICMYI

Listen: Here's What You Need To Know About ETFs Today (Hint: They're on Fire!)

Listen: Here's What You Need To Know About ETFs Today (Hint: They're on Fire!)

Cramer and His Team Stick to Their Disciplines -- Even When It's Disappointing

Cramer and His Team Stick to Their Disciplines -- Even When It's Disappointing