Pandora is “not where we want to be” on a focused advertising model, said Chief Financial Officer and interim CEO (see 1708010035) Naveen Chopra on an investor conference webcast Wednesday. Being able to target listeners more effectively is a “lever” the company wants to invest in to increase revenue, he said. It “learned the hard way that we do need to be more intelligent and more targeted,” Chopra said. The company increased ad loads “substantially” late last year, producing a “negative impact” on user engagement, leading it to “dial back some of that insertion,” he said. The music streamer wants to determine the appropriate ad load “for any individual listener,” Chopra said. That could differ depending on platform, music or surroundings. Chopra repeated the company’s commitment to subscriptions, saying growth in Apple Music and Spotify shows “a large number of users want access to music on demand.” Broader growth initiatives include expanding content to podcasts, talk radio, news, weather and sports, said Chopra. “There’s a sizable portion of listening” in non-music-based terrestrial radio and digital, he said.
Universal Electronics’ shares closed down 4.8 percent to $62.70 Friday as positive results for Q2 were offset by Q3 guidance below analysts’ expectations. UE had Q2 revenue of $177.9 million vs. $176.5 million in the year-ago quarter, but earnings-per-share guidance was short of consensus. Dougherty & Co.'s Steven Frankel, noting accelerating revenue and growing production volume in a new China factory, said Comcast purchases will become a smaller percentage of overall revenue. He cited a growing need of MVPDs to launch next-generation set-top boxes. CEO Paul Arling said Comcast, Cox and Shaw continued to upgrade customers to the X1 platform and its voice remote and that additional operators worldwide are in design and testing stages of the company’s technology. Chief Financial Officer Bryan Hackworth said Comcast was 24.2 percent of sales in the quarter and DirecTV was 10 percent.
Control4's partnership with Comcast is based on set-top boxes and DVRs, “not necessarily” the Xfinity Home platform, said the home control company's CEO. Martin Plaehn on his company’s earnings call Thursday said Comcast’s role providing content delivery and an internet pipeline to the home is “an enormous business driving most everything there.” The "intersection with our business is meaningful," he said. On Amazon’s Alexa and connected homes, Plaehn said more than 10,000 Control4 customers use Alexa daily for home automation experiences and usage is growing "consistently."
Fitbit shares closed up 15 percent Thursday to $5.84 after the company raised full-year guidance to reflect what CEO James Park called a first-half “upside." Park said on a Q2 earnings call Wednesday that the company is “executing according to our transition plan.” Demand and sell-in for connected health and fitness trackers were better than forecast, up 14 percent sequentially, he said. Revenue in Q2 fell to $353 million from $587 million in the year-ago quarter on sales of 3.4 million devices, said Park. Fitbit has sold some 67 million devices to date, he said, calling devices “a means to an end" in Fitbit’s “firm vision for the future.” The company's smartwatch will combine features “not yet seen in a smartwatch,” he said, seeing a $10 billion addressable market. It's the company's first product based on the IP and staff from recently acquired Pebble, he said: Fitbit sees a “blurring of lines” between trackers and smartwatches occurring over time.
Apple shares closed up 4.7 percent at $157.14 Wednesday after a better-than-expected earnings report Tuesday. Revenue in the quarter ended July 1 jumped 7 percent over the 2016 quarter to $45.4 billion on strength in the company’s services business, iPhone 7 and 7 Plus sales, and gains across all categories, said CEO Tim Cook on the earnings call. Profit rose 12 percent to $8.72 billion. IPhone sales reached 41 million units, and the company reduced inventory by 3.3 million, its lowest point in two-and-a-half years, said Cook. Average iPhone selling prices reached $606 in Q3, up from $595 a year ago, which Chief Financial Officer Luca Maestri attributed to the iPhone 7 Plus, which had a higher percentage of the iPhone mix than the flagship Plus model in the year-ago quarter. On Apple’s China business, Cook said the iPhone was “relatively flat” as the services business grew “extremely strongly."
Two researchers found a growing Q2 global smartphone market, they reported Wednesday, but IDC reported a 1.3 percent decline in shipments over the year-ago quarter. Canalys showed shipment gains of nearly 4 percent to 340 million and Strategy Analytics reported a 6 percent bump to 360 million units, but IDC recorded 341.6 million Q2 smartphone shipments vs. 346.1 million, excluding OEM sales. Samsung maintained the top spot across the board, at around 79 million units. It “continued to recover from last year’s Galaxy Note 7 battery fiasco,” said SA’s Neil Mawston. Apple, meanwhile, "must justify any significant price increases with tangible improvements,” said Canalys' Tim Coulling. No. 2 Apple, with 12 percent market share vs. 11.7 percent, shipped 41 million phones, said IDC. "Closing in fast on Apple" is No. 3 Huawei, which posted strong gains to reach 10.7 percent market share on 38.4 million shipments, said SA.
Some analysts have concerns about Pandora growth prospects, as it scaled back from revenue guidance of $1.5 billion-$1.65 billion for the year to $1.45 billion-$1.5 billion and Q3 revenue to $370 million-$385 million. Revenue advanced 10 percent over Q2 2016 to $376.8 million as paid subscribers jumped 24 percent, said the company Monday. Recent management changes (see 1706270031) “create uncertainty” and subscription numbers are expected to grow more slowly as Pandora focuses on overall audience growth, Wedbush Securities' Michael Pachter wrote investors Tuesday. Chief Financial Officer and interim CEO Naveen Chopra said lower guidance reflects the plan to prioritize growth and retention of active users “rather than aggressively pushing all users to subscriptions,” a projected $50 million-$55 million loss of revenue from the sale of Ticketfly and the closing of some Pandora international operations. Cowen & Co.'s John Blackledge later cited “a ton of moving pieces” and remained “cautious” on the company. Pandora shares closed down 3.35 percent Tuesday at $8.65.
Harman hopes to show drivers benefits of data sharing with connected cars, General Manager-Cloud Services Steve Surhigh told a recent demo event in New York. Personalization is a major benefit of the company's platform, which combines terrestrial and satellite radio and streaming services and recommends music. Data also can be sold to market researchers such as Nielsen or J.D. Power, he said. “We can track the individual radio stations people listen to down to the microsecond.” The platform can throttle the amount of data coming in, increasingly important as higher bandwidth networks proliferate. It collects about 50 megabytes of data monthly per vehicle, said Surhigh. “We try to keep that payload down because ultimately somebody is paying for that bandwidth.” Surhigh said in most global regions, there’s an opt-in program for information sharing: The company is trying to make the two-way data channel a “win-win-win for all the parties at play here."
DTS’ automotive business had 19 percent gains in Q2 vs. the year-ago quarter, driven by HD Radio penetration in North America, said Jon Kirchner, CEO of parent company Xperi, on a Thursday earnings call. HD Radio launched in many car models, he noted, and its DTS Connected Radio automotive platform is due in cars for 2018 and 2019. The platform, which combines terrestrial radio with IP delivery, launched at NAB in April and was demonstrated at forums in Tokyo and Geneva, Kirchner said. DTS has been working with broadcasters in the U.S., Asia, South America and Europe on launch plans, he said. On alleged patent infringement issues at its Tessera semiconductor business, Kirchner said discussions with Broadcom and Samsung are “very dynamic.” The company is working to renew a license with Samsung but “litigation remains a strong possibility,” he said. Samsung “is continuing to use our patented technologies broadly across its products,” Kirchner said. On Broadcom, Kirchner cited the International Trade Commission administrative law judge ruling in June (see 1707050024) finding that Patent No. 6,849,946 was valid, infringed and had a domestic industry, and noted parties filed petitions for review of the decision before the full ITC (see 1707140036). Tessera expects a final decision by Oct. 30.
Dolby CEO Kevin Yeaman said the company is in a “good position” with ATSC 3.0 and Digital Video Broadcasting specifications, on the company's AC-4 compression. He sees AC-4 being “broadly adopted” across a broad range of devices, with a "gradual rollout." AC-4 won’t be a “major factor in the foreseeable future,” Yeaman said, but he noted early adoption among TV makers and broadcast trials. Ultimately, the industry will migrate to AC-4 from AC-3 because of “higher efficiency” and other value propositions, he said. Meantime, Dolby Vision Blu-ray titles from Lionsgate, Universal and Sony have begun shipping, and Disney made its first Vision-Atmos title Guardians of the Galaxy 2 available for streaming, the CEO said on a fiscal Q3 webcast after regular U.S. markets closed Tuesday.