June 11, 2011

Pandora Ups IPO Ante

Online radio service Pandora is raising the proposed value of its initial public offering (IPO) by more than 30 percent and boosted the number of shares to be sold by as many as a million, as it eyes investors looking to sink their teeth into a new slate of Internet companies.

In a filing on Friday, Pandora set a debut price of between $10 and $12 per share, up from the previous $7 to $9, which will give the offering a maximum value of $202.6 million.

The Oakland, California-based online music streaming company, which plans to list on NYSE under the symbol "P," said it would raise the number of shares to be sold to 14.7 million.

The IPO from Pandora follows a list of other top Internet companies looking to grab investor dollars, including deal-of-the-day website Groupon, business-oriented social networking site LinkedIn and the world-leading social network Facebook.

Pandora said it is going public with the aim to get money it needs to grow and become profitable, and to also deal with an accumulated operating deficit. The company's revenue has been insufficient to offset the cost of paying royalties on songs, and getting big enough to tip the balance with more paid advertising is essential, Pandora said.

Still, there is some concern by critics that soaring IPO values are signs of another hiccup, even though the companies going public in this era make real money. For example, the business model of online daily deal site Groupon, which filed for a public offering last week, has been called into question since it is easily replicated.

Pandora got its start in 2000 as a music recommendation service, then known as Savage Beast Technologies. It changed its name in 2005 when it launched it Internet radio service that allows people to stream music over the Web. The service allows users to customize stations based on the music they like.

Joseph Kennedy, a former salesman for Saturn Corp. and executive for online banker E-Loan, has been CEO of Pandora since 2005. He owns 4.2 million shares in Pandora. Other stockholders include venture capitalists Crosslink Capital, Walden Venture Capital and Greylock Partners and newspaper and magazine publisher Hearst Corp.

The underwriters are Morgan Stanley, JPMorgan, Citi, William Blair & Co., Stifel Nicolaus Weisel and Wells Fargo Securities.

Pandora is available for the iPhone, the Blackberry, the Palm Pre, and devices running Google's Android and Microsoft's Windows Mobile operating systems, and currently only provides service within the United States. Pandora said it currently has more than 90 million registered users in April.


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