The company’s effort to provide cable systems with a slick alternative to their clunky conventional DVRs seems to have paid off in the three months that ended in October. TiVo’s revenues increased 43% vs the period last year to $117.3M. That’s well above the Street’s expectation of $81.3M. The net income figure is skewed by the $78.4M windfall TiVo received from Verizon last year to settle a patent infringement suit. With that factored in, the $12.5M profit in Q3 is down 78.9% from last year. Still, the company’s earnings of 10 cents a share beat forecasts for 6 cents. Total subscriptions were +32.3% to nearly 3.9M as a 295,000 increase from pay TV services outweighed the 21,000 drop in the number of DVRs that receive service directly from TiVo. CEO Tom Rogers says that this was “the best quarter for TiVo subscription growth” since he began to position the company as a natural ally for cable and satellite companies. The company’s been especially successful with overseas providers including UK’s Virgin Media and Spain’s ONO. TiVo says that its revenues from services and technology in Q4 should rise about 30% to as much as $85M.
UPDATE, 3:40 PM: The strategy to lower the retail price of TiVo DVRs made sense when the company’s revenues primarily came from its own subscribers’ monthly service payments. But CEO Tom Rogers says he’s giving ”quite a bit” of thought to the possibility of ending his company’s subsidies of its retail DVRs. Virtually all of TiVo’s new customers come via cable and satellite companies. Comcast, DirecTV and others are beginning to offer TiVo’s interface as a premium feature on their own DVRs. That’s why the prospect of requiring consumers to pay the full price for a TiVo DVR is “something we always continue to look at,” Rogers told analysts in a conference call. He isn’t ready to exit the retail DVR business just yet, though. It “gives us the consumer electronics chops as a cutting edge player,” the CEO says, and “distinguishes us from most other vendors.” DirecTV is preparing to launch a national marketing campaign for a TiVo-equipped set top box that has just begun to offer its customers. Meanwhile, Comcast is testing a different arrangement in the San Francisco area: The cable company markets and installs a TiVo DVR that consumers can buy at retail stores. Unlike most TiVos, the one Comcast serves includes all of its Xfinity Internet content, as well as outside services such as Netflix and Hulu. It’s “as robust an offering as is available anywhere,” Rogers says. The cable company plans a commercial roll out in the Bay area that’s ”weeks, not months, away.” Rogers says that other pay TV companies have expressed interest in the arrangement. He’s also building bridges with pay TV providers by offering non-DVR set top boxes. He also plans to offer TiVo boxes that would serve the entire home, with a central storage unit transmitting video to devices connected to other TV sets. That could be ready by mid-year, Rogers says.
UPDATE, 3:10 PM: TiVo told analysts in a conference call that litigation expenses will grow as the company gears up for battles to defend its DVR patents. The U.S. International Trade Commission holds a hearing in December. In January TiVo’s case against AT&T goes to trial in Texas; there are other court actions involving Verizon and Microsoft. The judge in the Texas case — who also oversaw TiVo’s successful suits against Dish Network — is due to retire in March. “Obviously there’ll be some delay,” TiVo General Counsel Matthew Zinn says. Research and development costs also will rise as TiVo tweaks its software to work with DVRs used by its growing number of partners including DirecTV, Comcast, RCN, Virgin Media, and Spanish broadband company ONO. “We’re investing substantially additional dollars this year to build a common code base” that would work on multiple platforms, CEO Tom Rogers says. He adds that TiVo is developing a product that integrates Comcast’s Xfinity broadband service. Consumers will buy it as a retail product. ”We think that’s an attractive model” for cable operators that want to offer advanced services without spending a lot on equipment, Rogers says. He wouldn’t disclose how much TiVo collects from the customers who go through cable and satellite services, but noted that they “contribute in a significant way (to earnings) once we get past the R&D costs.”
TiVo says it still has an ample supply of hard drives despite the floods in Thailand this …
TiVo today reported a second-quarter loss of $19.6 million, or 17 cents a share, compared with a $15.3 million loss, or 13 cents a share, a year ago. That beats analysts’ estimates of a 20 cent loss but can’t hide the fact that its subscriber base continues to shrink (its sub total has dipped below 2 million). Still, revenue rose 19% to $61.2 million, beating the Street, thanks to licensing deals for the DVR pioneer’s patented technology, especially from overseas. That’s the technology the company has protected in the courts; during the quarter, it settled its long-time lawsuit with Dish Network for $500 million, and it has similar suits pending against AT&T and Verizon. On Aug. 12, CEO Tom Rogers unveiled a $100 million stock buyback as TiVo’s share price had dipped 25% during the past month. On Wednesday, TiVo’s stock closed down 1.6% at $8.12 but rose almost 7% after-hours when the quarterly earnings were released.