October 20, 2003
Shares of TiVo (Nasdaq: TIVO ) are off almost 9% today on concerns raised in a New York Timesarticle (free registration required), which argues that stand-alone digital video recorders (DVRs), like TiVo's namesake product, will one day be largely obsolete. Instead, customers will supposedly choose set-top boxes with DVR technology built into them. The case is then made that TiVo could lose out while such cable companies as Time Warner (NYSE: TWX ) win.
But here's the thing: This argument ain't new. The threat to TiVo from DVR-integrated products has been around for quite a while, and TiVo's management is actively addressing it. The article left out, for instance, the fact that today TiVo and DirecTV are launching their $99 set-top/DVR box combo. Existing customers can switch to the combo box, and new customers can get in the game, all for $99 including installation.
Heck, the Times piece even rehashes the DirecTV/Hughes (NYSE: GMH ) /News Corp. (NYSE: NWS ) story from September. Yes, the same story that was put to bed after it was announced that DirecTV's chairman and CEO will join TiVo's board of directors.
The article also talks about TiVo transitioning from a box, or hardware, company into a subscription-based service. Our own Rick Aristotle Munarriz, however, covered this very thing back in August. TiVo isn't only partnering with DirecTV to get its technology into the homes of customers; holiday shoppers should have 10 different TiVo-related products to pick from later this year.
Given that there's actually no new news today on TiVo's future or its prospects for success, the market's reaction looks overdone.
TiVo was David Gardner's July recommendation in theMotley Fool Stock Advisor.