On Wednesday night, it'll be time for a first-quarter earnings report from digital video recorder pioneer TiVo (Nasdaq: TIVO). Check out the last episode, then jump back to real time for an update.
What Fools say:
Here's how TiVo's Motley Fool CAPS rating stacks up against some of its peers and competitors:
| |
Market Cap (billions)
|
Trailing P/E Ratio
|
CAPS Rating
|
|
Microsoft (Nasdaq: MSFT)
|
$261.2
|
16.3
|
***
|
|
Comcast (Nasdaq: CMCSA)
|
$63.9
|
26.9
|
**
|
|
Sony (NYSE: SNE)
|
$48.2
|
19.5
|
**
|
|
Macrovision Solutions (Nasdaq: MVSND)
|
$1.3
|
16.2
|
****
|
|
TiVo
|
$0.8
|
N/A
|
**
|
Data taken from Motley Fool CAPS and Capital IQ.
Some of our CAPS players like TiVo for its strength in the in-home entertainment market. Take rogerlig's comment: "With gas prices rising, even a trip to the DVD store is becoming an issue. TIVO, Netflix [Nasdaq: NFLX], even Blockbuster [NYSE: BBI] stand to benefit short term (until video on demand catches fire)."
Other players question the business model, and the competition looks so very strong. "Being a verb is nice and all, but where are the profits?" asks CAPS player im2fools. "Love the product, and will be sad to see them wither away. Someday we can all buy tivo dolls to sit next to our pets.com puppet."
What management does:
While the gross margin has expanded quite steadily, the revenue growth is stalling. The company turned its first and so far only quarterly profit a year ago, and even that short-lived victory was marred by $26 million in negative operating cash flows. If you go by the numbers, there ain't much reason to cheer for TiVo.
|
Margins
|
10/06
|
1/07
|
4/07
|
7/07
|
10/07
|
1/08
|
|
Gross
|
33.1%
|
33.4%
|
37.6%
|
35.4%
|
38.0%
|
44.2%
|
|
Operating
|
(22.0%)
|
(19.3%)
|
(9.6%)
|
(13.4%)
|
(11.0%)
|
(13.3%)
|
|
Net
|
(20.4%)
|
(18.4%)
|
(13.8%)
|
(17.9%)
|
(16.2%)
|
(11.5%)
|
|
FCF/Revenue
|
(20.2%)
|
(15.8%)
|
(20.1%)
|
(14.5%)
|
(11.0%)
|
(14.5%)
|
|
Growth (YOY)
|
10/06
|
1/07
|
4/07
|
7/07
|
10/07
|
1/08
|
|
Revenue
|
24.0%
|
30.7%
|
27.4%
|
17.6%
|
13.6%
|
5.3%
|
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
Despite all the negatives, I happen to believe in TiVo. In the short term, there'll be more losses, no cash flows, and lots of bad news all around. The stock may drop, and this might not be the best time to buy.
Then there's the medium term. Over the next couple of years, I think that the company will make its way into lots of new homes by way of cable companies paying a license fee and pushing out TiVo software onto its customers' set-top boxes. The recent court victories can turn TiVo into a software licensor with a near-monopoly on the DVR market. This will be TiVo's Golden Age.
Beyond that, management better be ready for a big change. Five years from now, everyone will have a real TiVo -- but five years after that, the whole idea of recording shows should be obsolete. Enter the age of video on demand, where the cable provider hosts every show, every clip, every event on its servers so you never have to remember to record anything again. Then it's up to TiVo to morph into a user interface expert that can organize that ocean of content better than anybody else. When we get that far, all bets are off.
Right now, we're still in that first phase and I don't expect any earth-shattering news such as an actual profit or accelerated sales on Wednesday. Hold your horses today, saddle up sometime soon, and then take care not to ride too far into TiVo's sunset.
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