Google Inc (GOOG), Pandora Media Inc (P): Rising Competition Cannot Stop This Company

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Sirius XM Radio Inc (NASDAQ:SIRI) is one of the most widely followed stocks in the market. The company made an incredible recovery since its dip to 10 cents in 2009. Currently, it is trading around $3.50, with a year-to-date return of about 20%. The recent Sirius XM Radio Inc (NASDAQ:SIRI) jump was triggered by a combination of speculations and optimistic outlook for the company amid rising subscriptions. The rally came even while it faces the threat of Google Inc (NASDAQ:GOOG) entering the market. Apple Inc. (NASDAQ:AAPL) is another probable big competitor, as well.

Sirius XM Radio Inc (NASDAQ:SIRI)

While Sirius XM Radio Inc (NASDAQ:SIRI) continued to remain bullish from the start of the year, there are growing concerns for correction anytime soon. However, since the major fall in 2008, Sirius rebounded and remained generally upbeat for the last four years. The growing subscriber base was a big plus, fueling the rally. As long as the company manages its finances well and continues to capture more subscribers, I think Sirius XM Radio Inc (NASDAQ:SIRI) will keep outperforming. The recent earnings report supports this point.

First Quarter 2013 Financial Highlights

On April 30, Sirius reported the first quarter 2013 results. One of the major highlights of the report is the addition of 453,000 new subscribers. This raised the subscriber level of Sirius XM Radio Inc (NASDAQ:SIRI) to a record number of 24.4 million, up 9% compared to the prior year.

Another remarkable highlight is the 12% growth in revenue at $897 million. Net income also jumped 15% from $108 million during the first quarter of 2012 to $124 million. Similarly, earnings before income tax also jumped to a record $262 million, up 26% over last year at $208 million. However, the basic and diluted net income per common share remained unchanged at $0.02 per share.

Sirius XM Radio Inc (NASDAQ:SIRI) achieved a major feat during the quarter when its free cash flow reached $142 million. This is a stunning 847% jump from the $15 million free cash flow during the same period in 2012. From this perspective, it is the best ever first quarter in the history of Sirius. Consequently, the company raised its free cash flow guidance to $915 million, up 29% over last year.

Moving forward, the company aims to capture 1.6 million more new self-pay net subscribers, and 1.4 million total net subscribers. It also strives to earn at least $1.1 billion adjusted EBITDA. While these projections are achievable given the present growth rate, competitors may build obstacles along the path.

Sirius vs. Pandora

Pandora Media Inc (NYSE:P) is one of the tough challenges of Sirius XM. Pandora remains the industry leader in the internet radio market with a commanding 70% market share. In the U.S., its share in the total radio market is 8%. Spotify, which is rumored to be targeted by Google Inc (NASDAQ:GOOG) has a much lower market share.

In the financial aspect, Pandora Media Inc (NYSE:P) showed weaker financials compared to Sirius XM. While Sirius XM reported earnings growth, Pandora Media Inc (NYSE:P) posted net loss of $14.5 million. The net loss widened from the $8.18 million net loss it incurred during the same period in 2012.

However, its total revenue made a tremendous 54% jump from $81.326 million to $125.089 million. The net loss was due to the rising costs and expenses on content acquisition, product development, and sales and marketing. These are somehow investments that can further strengthen the company in the future.

With regards to share performances, Pandora Media Inc (NYSE:P) shares also rallied during the same week when Sirius XM rallied. Year-to-date, Pandora made a higher leap at an astounding 72.6% from $9.49 to $16.38 on May 20. Truly, Pandora Media Inc (NYSE:P) showed its overwhelming strength over Sirius as a company with high potential.

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