Light at the End of TiVo's Tunnel Vision
By Rick Aristotle Munarriz
November 29, 2007
It's OK to take a bow, TiVo (Nasdaq: TIVO). There's no need to be camera-shy.
The digital video recorder (DVR) pioneer came through with better-than-expected third-quarter results last night. Service and technology revenues inched higher by 11% to $58.3 million. The loss of $0.08 a share was substantially better than the $0.12-per-share deficit it posted a year earlier. (No need to hunt for the previous quarter's results. We've recorded them here.)
That stacks up nicely against Wall Street's targets. Analysts figured that the quarterly loss would actually widen on a mere 8% top-line advance. And no one -- not even TiVo -- expected the period to wind up in the black on an adjusted EBITDA basis. But it did.
It wasn't a glorious quarter on the subscriber acquisition front, but that's baked into the single-digit share price. The company gained a few company-owned TiVoholics, but it lost substantially more on the DirecTV (NYSE: DTV) end. The top line is still inching higher, though; given that the DirecTV users from the now-defunct offering were paying a pittance compared to what actual subscribers are paying.
In the end, TiVo closed out September with 4.1 million total subscribers, 1.7 million of those being direct TiVo accounts.
This doesn't mean the company's future is in direct subscribers. The company has been striking deals with the likes of Comcast (Nasdaq: CMCSA) in the United States and Cablevision (NYSE: CVC) in Mexico. It's also making a retail push into Canada next month through Best Buy (NYSE: BBY) and other area consumer-electronics chains.
TiVo is also riding on the growing wingspan of its partners. RealNetworks (Nasdaq: RNWK) now provides unlimited streaming of 4 million songs, while Amazon.com's (Nasdaq: AMZN) Unbox digital video store is stocking 15,000 titles. Both services integrated seamlessly in delivering content through broadband-enabled TiVo boxes.
The near term is also shining a little brighter than the pros were expecting. The company's holiday quarter guidance calls for a loss of $0.09 to $0.12 a share, noticeably less bloody than the $0.17-per-share shortcoming that analysts were looking for.
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