Pandora CEO Joe Kennedy Abruptly Resigns, Stocks Soar
Pandora CEO Joe Kennedy abruptly resigned yesterday. The move was unexpected and came just as the company was revealing its earning report for the final quarter of 2012. The report was better than expected, easing investor’s concerns and sending the company’s stock climbing. Shares jumped by $2.42 or 20.6% after the announcement, closing at $14.15. The last time Pandora stocks closed over $14.00 was in January of 2012.
CBS News reports that Kennedy released a statement which said in part, “As part of our board discussions of the road that lies ahead, I reached the conclusion and advised the board that the time is right to begin a process to identify my successor”. He didn’t give any details about what might have spurred his decision. According to a report in The New York Times, he may have been feeling the effects of burn out, saying his head needed a “recharging station”.
The company said while it lost $14.6 million, equal to 9 cents a share, in the three months ending on January 31st, 2013. Overall revenues rose 54% to $125 million, which beat the numbers forecast by analysts. Revenue from mobile devices also rose 11% and listener hours by 53%. The rise in listener hours may have Pandora concerned about increasing royalty expenses, explaining why they announced users with free accounts would be limited to 40 hours per month of listening.
Kennedy, 53, joined Pandora in 2004, when it was known as” Savage Beast”. It was relaunched in 2005 and today nearly 70 million people enjoy its musical offerings. It was knocked for a loop by the recording industry’s insistence on high licensing fees but has persevered. It’s currently keeping a close eye on Apple as it prepares to launch its own radio service. So far the project, dubbed iRadio, has been held up as Apple continues to negotiate a licensing deal with record companies. The company is insisting on a royalty rate far below what Pandora and other streaming services pay and many see it as an attempt to undercut the competition.