Wall Street Watch this Week: What's in Pandora's Box?
Streaming music online may not be a very profitable business these days, but it's certainly growing in popularity.
Market leader Pandora (P) reports its latest quarterly results on Wednesday afternoon. Earlier this month the provider of streaming music and comedy revealed healthy growth metrics for the month of July.
Pandora closed out the month with 54.9 million active listeners -- a strong advance from its 37.1 million listeners a year earlier – and the new media company cranked out 1.12 billion hours of digital audio in July, a robust 76% increase since July of last year.
Yes, most Pandora users are freeloaders. They put up with the intermittent ads and limitations on how many songs they can skip in exchange for Pandora on their PCs or smartphones for free. Between the costs of serving up chunky media files and record labels taking a percentage of Pandora's revenue in the form of music royalties, it's hard to make a profit on advertising alone.
Analysts see the company posting its third consecutive quarterly deficit on Wednesday.
Other things worth watching this week
TiVo (TIVO) is another company likely to post a widening deficit on Wednesday. Yes, TiVo is the brand that everyone associates with the DVR. However, most of the digital TV recorders out there these days aren't TiVo. There are actually just 2.5 million TiVo subscribers, and less than half of those are serviced directly by the company. The good news for TiVo is that it collects healthy royalties from other DVR makers as a result of its potent patents. Still, that's apparently not enough to make it outright profitable.
The last trading week in August is naturally pretty quiet on the earnings front, but some of the names that are expected to post improving profitability include mining equipment maker Joy Global (JOY), stylish travel accessories maker Vera Bradley (VRA), and outdoor sporting apparel retailer Zumiez (ZUMZ). Come to think of it, Joy Global would also make a good name for a maker of colorful travel gear.
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Joy Global.
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