Business Blog Posts

Pandora shares opened at $20 on Wednesday -- implying a market value of about $3.2 billion -- and later traded as high as $23.75 before giving back some of those gains.

The company is trading at 24 times its 2010 sales, far above the value placed on Google, Amazon and Sirius XM.

"I think it's heavily overvalued," said Anupam Palit, an analyst with GreenCrest Capital. "It's a great company but what we're seeing right now is incredible investor demand for Internet IPOs and a lot of dollars chasing very little supply."

Pandora follows a handful of other Internet companies such as professional networking site LinkedIn and online daily deal site Groupon, which filed to go public earlier this month.

Online social media start-ups have stoked the interest of investors who are anticipating the public debuts of Facebook and Twitter, despite a broader downturn of other large IPOs like Ally Financial.

LinkedIn, another hot debut, is still trading above its IPO price, but at $74 a share it is down nearly 40 percent from its peak.

"It's too early to start throwing around the 'b-word,'" GreenCrest Capital's Palit said, referring to a potential bubble. "In 12 to 18 months when we have more follow-ons, like IPOs from Groupon, Zynga and Facebook, then we'll know more."

Pandora, which has been around for a decade, runs a service that recommends songs to listeners based on member feedback, allowing them to create playlists based on a song, artist or genre.

Users can listen to the service through computers, smartphones and devices that hook into home entertainment centers such as the Roku box. Pandora has also struck up partnerships with auto manufacturers including Ford General Motors and Mercedes-Benz.

With 90 million registered users in the United States, Pandora makes money mainly from advertising and it has to pay significant royalties for music.

So far, the cost of maintaining the service is outpacing its revenue growth.

Pandora is going up against traditional radio companies, satellite radio provider Sirius XM, music services such as Rhapsody, not to mention services from Apple, Google and Amazon that allow users to access music from anywhere.

Founded in January 2000, as TheSavageBeast.com, the company changed its name five years later to Pandora Media.

The company said it has "incurred significant net operating losses" over the decade totaling $92.1 million as of the end of April 2011, according to a government filing.

For the three months ending April 30, Pandora reported revenue of $51 million with a net loss of $6.8 million.

(Reporting by Jennifer Saba and Liana Baker; editing by John Wallace and Chelsea Emery)

* Euro zone ministers failed to agree on how to share the costs of a new bailout for Greece, squeezing risky assets like equities and the euro currency. For details, see

* Pressuring financials, French banks were placed under review for a downgrade by rating agency Moody's.

* S&P 500 futures fell 6.2 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures lost 63 points and Nasdaq 100 futures dropped 9.75 points.

* The S&P 500 is expected by many market participants to test its March low near the 1,250 level as economic data continues to support the idea a economic recovery was in question. The index closed at 1,287.87 on Tuesday.

* Consumer prices in the United States likely stalled in May, brought on by weaker commodity prices that could ease some pressure on the Federal Reserve to start tightening monetary policy. The Labor Department will release the May consumer price index at 8:30 a.m. EDT, with economists expecting a 0.1 percent rise, compared with April's 0.4 percent increase.

* The New York Federal Reserve releases its Empire State Manufacturing Survey for June also at 8:30 a.m. Economists expect a reading of 12.50, compared with 11.88 in May.

* The Fed releases industrial production and capacity utilization data for May at 9:15 a.m. EDT. Economists in a Reuters survey expect a 0.2 percent increase in production and a reading of 77.0 percent for capacity utilization.

* Resource-related stocks will be in focus as crude oil fell after rising gasoline stockpiles in the U.S. signaled fuel demand was stalling.

* On Tuesday, the Dow Jones industrial average .DJI gained 123.14 points, or 1.0 percent, to 12,076.11. The Standard & Poor's 500 Index .SPX rose 16.04 points, or 1.3 percent, to 1,287.87. The Nasdaq Composite Index .IXIC advanced 39.03 points, or 1.5 percent, to 2,678.72.

(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, surged 13.0 percent in the week ended June 10, the biggest percent gain since March.

The MBA's seasonally adjusted index of refinancing applications spiked up 16.5 percent, while the gauge of loan requests for home purchases gained 4.5 percent.

"Mortgage rates have declined for 8 of the past 9 weeks. Coming off of the Memorial Day holiday, refinance application volume increased significantly, as borrowers jumped to lock in the lowest mortgage rates since last November," Michael Fratantoni, MBA's vice president of research and economics, said in a statement.

Fixed 30-year mortgage rates averaged 4.51 percent in the week, off from 4.54 percent the previous week.

The refinance share of mortgage activity rose to 70.0 percent of total applications from 67.3 percent the week before.

(Reporting by Leah Schnurr; Editing by Diane Craft)

The Labor Department was set to release the May consumer price index at 1230 GMT (8:30 a.m. ET). Economists in a Reuters survey expected a 0.1 percent rise, compared with April's 0.4 percent increase.

The Mortgage Bankers Association will release its Weekly Mortgage Market Index for the week ended June 10 at 1100 GMT. The index read 517.5 in the prior week when the refinancing index was 2,475.7.

Resource-related stocks will be in focus as crude oil fell as rising gasoline stockpiles in top consumer the United States signaled fuel demand was stalling.

At 1230 GMT, the Labor Department issues Real Earnings for May. Economists expected real earnings to fall 0.2 percent versus an April drop of 0.3 percent.

Swiss Stock Exchange officials are probing Swiss medical device maker Synthes's unusual share spike before its takeover by Johnson & Johnson (JNJ.N), the Wall Street Journal reported, citing people familiar with the matter.

The New York Federal Reserve releases its Empire State Manufacturing Survey for June at 1230 GMT. Economists expected a reading of 12.50, compared with 11.88 in May.

The Treasury Department issues at 1300 GMT net capital inflows and foreign treasury purchases for April. In March, net capital inflows were $116.0 billion and foreign net purchases of U.S. treasuries were $26.78 billion.

The Federal Reserve releases industrial production and capacity utilization data for May at 1315 GMT. Economists expected a 0.2 percent rise in production and a reading of 77.0 percent for capacity utilization.

Euro zone ministers failed to reach agreement on Tuesday on how private holders of Greek debt should share the costs of a new bailout, putting the onus on the leaders of Germany and France to forge a deal later this week.

The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.1 percent on concerns about Greece's debt situation, after rising 0.8 percent on Tuesday, buoyed by Chinese economic data.

On Tuesday, the Dow Jones industrial average .DJI gained 123.14 points, or 1.0 percent, to 12,076.11. The Standard & Poor's 500 Index .SPX rose 16.04 points, or 1.3 percent, to 1,287.87. The Nasdaq Composite Index .IXIC advanced 39.03 points, or 1.5 percent, to 2,678.72.

(Reporting by Atul Prakash; Editing by Dan Lalor)

Asian stocks outside Japan were largely flat. Markets generally opened higher as positive data from the world's two largest economies encouraged investors to buy into growth-sensitive assets.

But later, concern about the global outlook and the Greek debt crisis made indexes slip. Shares in Japan and Korea rose.

European stocks were expected to inch lower early on Wednesday as investors' appetite for riskier assets was seen falling after the euro zone ministers failed to finalize the Greek deal.

The ministers were unable to agree on how private holders of Greek debt should share the costs of a new bailout, putting the onus on the leaders of Germany and France to forge a deal later this week.

Selling pressure also increased as Moody's placed Credit Agricole, BNP Paribas and Societe Generale on review for a possible downgrade, focusing on their holdings of Greek public and private debt.

Oil fell on Wednesday as the dollar strengthened after the failure to strike a Greek agreement, while rising gasoline stockpiles in the United States signaled fuel demand is stalling.

The euro was also hurt by a report in the Financial Times saying the German-inspired Greek debt rescheduling plan could force euro zone governments to provide up to an extra 20 billion euro. The currency earlier came under pressure having failed to break through $1.4500.

European Central Bank Executive Board member Juergen Stark said on Wednesday that debt relief from private banks to Greece must be on a voluntary basis, otherwise a contagion could break out on financial markets.

"The problem is not the fact that Greece is likely to face some form of a default. The problem is that the debate over the involvement of private investors in the rescue scheme drags on, making market participants jittery," said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ.

The euro was down 0.2 percent at $1.4414 after reaching an Asian session high of $1.4451 early on Wednesday after better-than-expected U.S. retail sales and Chinese inflation data boosted risk appetite the day before.

The euro briefly dipped below support at $1.4410 and decent support was seen at $1.4375, with traders talking about good size stops at $1.4350. It also inched back toward a record low against the Swiss franc hit on Friday below 1.2 euro.

The dollar bought 80.50 yen, still well within the prevailing 79.50-81.00 yen range, where the pair seems to have stabilized after falling from an April peak around 85.50.

The Australian dollar briefly popped above $1.0700 after the Reserve Bank of Australia governor said an increase in interest rates was still likely to be needed to restrain inflation.

GOLD GAINS

Safe haven gold extended its gains amid the move out of risky assets and after data showing strong economic growth in China stoked fears of inflation, and as U.S. retail sales fell less than forecast.

Chinese data showed the world's second biggest economy may avoid a hard landing as some had feared, while a U.S. consumer spending report that was not as weak as expected lifted U.S. stocks .N, oil and other growth-oriented markets on Tuesday.

Spot gold was trading slightly firmer at $1,524.64 after rising to $1,525.50 earlier. It is well below a high around $1,575 touched in early May.

Japan's benchmark Nikkei average .N225 ended 0.28 percent higher while the broader Topix .TOPX posted a similar gain.

The MSCI index of Asia Pacific shares outside Japan .MIAPJ0000PUS was off 0.1 percent.

The Korea Composite Stock Price Index .KS11 gained 0.5 percent.

Brent crude for August, which will become the front-month contract after July expires at the end of Wednesday trade, shed 24 cents to $119.11 a barrel by 0439 GMT, while July U.S. crude slipped 30 cents to $99.07.

Euro zone ministers failed on Tuesday to reach an agreement on how private holders of Greek debt should share the costs of a new bailout.

The lack of a deal pushed bond yields of Greece, Ireland and Portugal to their highest levels since the introduction of the euro in 1999, and Moody's on Wednesday placed France's top three banks on review for a possible downgrade, citing the banks' exposure to Greek debt.

"One of the advantages of this long drawn-out crisis resolution process is that many private sector entities that were exposed to Greece have reduced their exposure," Rajan told reporters on the sidelines of an investment conference in Singapore.

"The extent to which banks in Europe are exposed to Greece is much more limited than it was, even say, six months or a year ago, and so the cost of a Greek default and restructuring could be absorbed by the banking sector," he said.

Rajan said a restructuring of Greece's debt looked increasingly probable as Athens lacked the political will to carry out widespread privatizations of state assets and budget tightening.

"If it (the debt restructuring) happens in a way that banks and markets are prepared for, even if not publicly but at least privately, it is very well containable," he said.

"But a restructuring which happens because the dialogue breaks down will be more complicated because that would suggest that there will be implications for Ireland, for Portugal and so on, and that could be more problematic down the line."

Rajan is now a professor at the University of Chicago's Booth School of Business and an economic adviser to India's prime minister.

(Reporting by Kevin Lim; Editing by Kim Coghill)