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Pandora, investors seek up to $123 million in IPO

June 2, 2011 |  3:49 pm

Pandora Media Inc., which announced plans earlier this year to sell its stock in an initial public offering, said the company and its investors were seeking to raise as much as $123 million--an amount that would value the Internet radio pioneer at about $1.3 billion.

The proposal, filed Thursday with the Securities and Exchange Commission, calls for the Oakland company to sell a little more than 5 million shares, priced between $7 and $9 a share. Pandora's stakeholders, meanwhile, expect to offer 8.7 million shares, for a total of 13.7 million shares, or about 8.8% of the company.

Pandora, which requested to be listed under the ticker symbol "P," did not specify when it would begin selling its shares on the New York Stock Exchange. 

Among Pandora's investors are Walden Venture Capital, Crosslink Capital, Greylock Partners, Labrador Ventures, Hearts Corp. and former News Corp. Chief Operating Officer Peter Chernin. 

Although Pandora's music service is used by more than 90 million registered users who have logged  billions of hours in listening to its catalog of more than 800,000 songs, the company has yet to see a profit.

Pandora lost $1.8 million on $137.8 million in revenue for its last fiscal year ended Jan. 31. It paid out half of that -- about $69.4 million -- in fees and royalties to music labels and publishers. The other half, and then some, went to marketing, administrative and other expenses.

The vast majority of Pandora's revenue, about $119.3 million, comes from 30-second ads that are inserted every 20 minutes on its basic service. A small number of Pandora's listeners pay a monthly fee to skip the ads in its premium service, providing the company with about $18.4 million in revenue.

Pandora's impending offering is one of several hot technology stocks to debut this year. Santa Monica online content firm Demand Media Inc., LinkedIn Corp., a social network for professionals, and Russian search engine Yandex were among the most successful IPOs this year.

Other companies reportedly lining up for later this year are Zynga Inc., a maker of social games, and Groupon Inc., which filed its IPO papers with the SEC on Thursday.

-- Alex Pham

RELATED: 

Groupon files for $750 million IPO

Pandora files for IPO

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