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.