Tomahawk, WI 8/26/2013 (BasicsMedia) – The 2Q14 financial results release was not so bright for internet radio services provider Pandora Media Inc. (NYSE:P). The company that offers customized radio channels to end users is not an unknown name in America as is evident from its 125 million user base in the country. The company’s main product is an algorithm that allows its user to create up to a thousand radio stations playing customizable playlists. The program predicts the user sentiment and preferences based on genre, artist name and or song title to ascertain what the user would love to listen to and produces musical content lists based on its predicted patterns.

Analyst’s consensus estimates for the music-streaming services provider was a quarterly EPS of $0.02 at a revenue level of $156. The company’s breakeven point in the same quarter last year was at a revenue level of $101 million. The shares of the company surged to a $21.72 a share in the trading session that followed the release of its quarterly earnings.

Although expanding user base is a great potential for growth, investors can clearly see that the company might find it difficult to grow solely with its main revenue generating activity (its primary product). There is little more than negligible chance of growth in the company’s financial strength unless there is more than a little less improvement in its revenue model. The main revenue model of the Pandora Media contains two segments free radio and Pandora One (a subscription based service).

 Under the subscription service plan offered by the company all users opting for free services would still be tapped in for advertisement revenues while those opting for subscription service will be paying a flat fee to make up for the ad revenue lost.  However, both free and subscribed for music streaming will reap revenues based on the size of customer base and that will require one hell of a marketing pitch considering the product is already in its maturity phase.

Additionally, the company faces intense competition in its target market from market leaders like Apple Inc (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG). Although the music streaming market is quite an unexplored area compared to the video streaming the later two contenders are undoubtedly the tech Goliaths with a strong hold in the market in the form of a large customer bases, larger market share and gigantic resource base. Pandora Media Inc (NYSE:P) on the other hand has only managed to maintain a marginal profit and that too with a concentrated product portfolio for least room for diversification.

The company has been up for the challenge well ahead of time. Besides its growing customer base and traditional advertisement revenue source it has been building on mobile monetization. Of course the company’s mobile monetization plan could be the Make or Break factor for decision of aware investors who can see through the glaze of customer base and market share and spot weakening profitability portfolio of the company.

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