Today: Pandora Media suffers on Wall Street after announcing a monthly decline in listenership, and Apple drops after Samsung injunction denied.
The Lead: Pandora declines after announcing slight drop in listeners, end of reports
Pandora Media's stock has been on a record-breaking run for months, receiving fuel from monthly reports on how many users are listening to the Oakland company's streaming-radio offering amid fresh competition from Apple's iTunes Radio. The gains hit a pothole Thursday, though, as Pandora's monthly report showed a decline in the number of listeners and the company announced it would stop sharing the information so frequently, while rival Spotify bolstered its service with an acquisition.
Pandora dropped 5.6 percent to $37.23 Thursday, the largest percentage drop in the SV150 index, after hitting intraday and closing record highs Wednesday, when share prices topped $40 for the first time. Pandora's Thursday closing price would have been a record just a month ago, as the company has experienced a rocket ride, rising as much as 52 percent in 2014 and more than 240 percent in the past calendar year.
Enthusiasm for Pandora has mostly stemmed from the company's ability to continue growing its user base while facing increasing competition from the likes of Spotify, iTunes Radio and Beats Music, services that could pull listeners from Pandora, which generates revenue from advertisement sales that are helped by having a large, engaged audience. Since March 2012, the company has released information on its listenership every month, but included in Thursday's release was a note saying those releases would stop this summer, with Pandora suggesting that third-party services perform the same service admirably.
"Pandora believes advertisers can now access the necessary tools to make accurate side-by-side comparisons" without Pandora releasing its monthly report, the company's announcement read; Pandora will continue to detail the numbers in its quarterly financial releases.
Few see coincidence in the announcement arriving with numbers that showed a sequential decline in Pandora's audience, however. While Pandora trumpeted 9 percent year-over-year growth in the number of listener hours, the amount of time Pandora's audience spends listening to the streaming-radio service seems to have leveled off and possibly declined as 2014 begins.
Pandora reported 1.58 billion listener hours in December, then posted the exact same number in January. In February, that total declined to 1.51 billion, a drop that could be explained by fewer days in the month, but even adjusting for the shorter time period, it seems Pandora is struggling to establish a continuing growth trend that will be critical as it fights for advertising dollars and investor interest.
Numbers from the past three months "suggest Pandora is approaching saturation," Albert Fried analyst Richard Tullo told The Wall Street Journal for a Thursday report titled "Is Pandora peaking," reflecting the fears that may have led to a sell-off in Pandora stock -- the stock's volume of trades Thursday was twice its average.
Pandora CEO Brian McAndrews, speaking at a conference Thursday, attributed the recent stall to "the law of large numbers," and said he expects listener hours to rebound in March.
FBR Capital Markets analyst Barton Crockett agreed with McAndrews' assessment, and Susquehanna analyst Brian Nowak defended the company in a Thursday note, saying that Pandora's focus on attacking local radio markets with its ad sales teams will pay off.
"Investor focus should turn to Pandora's ad dollar opportunity and upside potential from the local sales force becoming more efficient and a larger ad load (more ads served per listener hour) in 2014," Nowak wrote.
Pandora's competition is not sitting on its hands, however, with Apple announcing a move into car stereos earlier this week that shut out Pandora, and Spotify acquiring popular music-recommendation service The Echo Nest on Thursday to help it better compete with Pandora.
SV150 market report: Apple declines after Samsung injunction denied
Silicon Valley tech stocks declined overall Thursday despite slight overall gains on Wall Street, as the Bay Area's biggest tech company, Apple, declined after once again being denied a ban on sales of certain products from rival Samsung.
San Jose-based Judge Lucy Koh denied Apple's request for an injunction against Samsung products that were found by a jury to have infringed on Apple products in a blockbuster Silicon Valley trial that resulted in a total judgment of nearly $1 billion for the Cupertino tech giant. While Apple won the big-money verdict, they have now been shot down twice by Koh in an attempt to ban the devices specified in the case, after an appeals court asked the judge to re-examine the request with less-strict standards. While a ban on the older devices at issue in the case would not have caused serious damage to Apple's South Korean rival, it would have set a precedent that may have resulted in bans against Samsung's newer devices, which will be at issue in a second court battle between the two tech titans set to begin later this month after their CEOs failed to resolve the dispute in mediation. Apple stock declined 0.3 percent to $530.75 Thursday.
Twitter and Facebook headed in opposite directions after Janney Capital analyst Tony Wible wrote that television viewers are interacting more with social media, giving both companies fuel for their drive to monetize real-time conversations. Twitter gained 0.8 percent to $54.83 before releasing its annual report after the bell, which gave insight into previous acquisitions; Facebook fell 1 percent to $70.84 after reaching records Wednesday, as the Menlo Park social network changed up its news feed yet again and faced a fight on its WhatsApp acquisition. Wall Street is preparing to ship big bucks to Silicon Valley, with Mountain View website Coupons.com expected to price its initial public offering Thursday evening after establish a potential range of $12 to $14, and FireEye preparing a secondary offering that could bring in more than $1 billion less than six months after the Milpitas security software company's eye-popping $300 million IPO. For updates on those two offerings, check www.siliconvalley.com.
Up: Applied Materials, Twitter, eBay, Advanced Micro Devices, Intel, LinkedIn, Hewlett-Packard, Electronic Arts, Yahoo, Juniper
Down: Pandora, Gilead, Zynga, Workday, NetApp, Nvidia, SanDisk, Facebook, Salesforce, VMware, Splunk, Symantec, Netflix
The SV150 index of Silicon Valley's largest tech companies: Down 5.37, or 0.34 percent, to 1,578.72
The tech-heavy Nasdaq composite index: Down 5.85, or 0.13 percent, to 4,352.13
The blue chip Dow Jones industrial average: Up 61.71, or 0.38 percent, to 16,421.89
And the widely watched Standard & Poor's 500 index: Up 3.22, or 0.17 percent, to 1,877.03
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.