Pandora Still Has More Mobile-Ad Inventory Than It Can Sell

But Advertisers Will Soon Follow Listeners, Analyst Predicts

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Shares in Pandora Media, the internet-radio pioneer that went public last year, fell after the company predicted ad sales this quarter wouldn't meet analysts' expectations.

Pandora said yesterday that it expects consumer-advertising sales this quarter to be lowest of the year.

Laura Martin, an analyst at Needham & Co., said Pandora has more mobile-ad inventory than it can sell. But she expects marketers to embrace the platform because about 70% of users listen on mobile devices.

"Mobile is putting a lot of pressure on their revenue line," Ms. Martin said yesterday in an interview with Bloomberg television. "Mobile growth will also allow this company to grow at a 100% next year," she said.

In a statement after markets closed yesterday, Pandora said its ad revenue this quarter would be $72 million to $75 million. It predicted a loss, excluding one-time charges, of 18 cents to 21 cents a share. Analysts had forecast revenue of $86.4 million and a loss of 2 cents a share.

Pandora faces growing sales and programming expenses. The company is accelerating hiring a sales force in the top 10 U.S. radio markets, CEO Joe Kennedy said yesterday on a conference call. Marketing costs rose 46% in the quarter ended Jan. 31, to $21 million. Programming expenses more than doubled, to $48.2 million, as the number of listeners rose.

Fourth-quarter revenue rose 71%, to $81.3 million, compared with the $83 million average of 14 analysts' estimates compiled by Bloomberg.

"We were a touch light of the high end of our guidance in terms of holiday ad spending," Mr. Kennedy said in an interview.

-- Bloomberg News --

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