'Cliff' to Blame for Pandora's Slowed Sales: CEO

Wednesday, 5 Dec 2012 | 1:05 PM ET
Victor J. Blue | Bloomberg | Getty Images

The "fiscal cliff" is to blame for Pandora's lowered revenue guidance, not increasing competition, the company's CEO Joe Kennedy said on CNBC's "Squawk on the Street" on Wednesday.

The fiscal cliff of automatic spending cuts and tax increases set for the end of the year may cause advertisers to be more cautious in their spending which could hurt Pandora's revenue, Kennedy said.

"We have concern that the Q1 spending by advertisers may be unusually back-weighted into February and March this year," he said.

Pandora's fiscal fourth quarter ends Jan. 31, making the company "unusually sensitive" to ad spend in the first quarter because of fiscal cliff fears, Kennedy said.

Pandora Earnings & Outlook Hit Sour Note
"Even at the reduced revenue guidance for the current quarter, we're looking at just under fifty percent year-on-year growth in revenue," said Joseph Kennedy, President & CEO of Pandora Media, discussing how the fiscal cliff has impacted his company's earnings, with CNBC's Julia Boornstin.

While Kennedy blamed the federal deficit for its stunted revenue growth, growing competition may also be weighing on the company.

Reports indicate that Apple may launch a radio service this year which would directly compete with Pandora's service. Kennedy, though, said he is not worries about what Apple plans to do.

"I think only Apple knows what Apple is going to do. What we are focused on everyday is delivering the best personalized radio in the world. We've delivered that, we've met every competitor that has entered the market and our share of Internet radio has only grown over time."

Pandora's stock was down as much as 17 percent Wednesday.

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