TiVo Pauses, Rewinds Headcount

By Rick Aristotle Munarriz | More Articles
November 19, 2008 | Comments (2)

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I reinstalled my mother-in-law's TiVo last night. It's one of those things that sons-in-law do to win babysitting points.

Now that TiVo (Nasdaq: TIVO ) is announcing layoffs, maybe I should start going around the country to hook up tech-slow mothers-in-law to the service. As a TiVo fan, subscriber, and shareholder, the last thing I want is for the DVR pioneer to start handing out pink slips. But yes, that's exactly what's happening.

"On November 18, 2008, we commenced a plan to reduce our operational expenses, primarily through a reduction in headcount, as we manage through the challenges presented by a difficult economic climate and a rapidly evolving retail consumer market," the company explained in its 8-K filing last night.

The company isn't revealing how many employees it will let go, but it won't be many. The move will result in a pretax charge of just $1 million during the current quarter.

But it still stings. TiVo seemed to be on a roll. It's been surprising Wall Street with back-to-back profitable quarters. The company has also been inking deals to make its home theater boxes more useful.

Did you catch this week's deal, which lets hungry couch potatoes order Domino's Pizza (NYSE: DPZ ) pies from their TiVo-tethered televisions? That's just one of the many recent partnerships that TiVo has picked up.

For those scoring at home, here are a few of the things you can now do with a TiVo:

Program your TiVo through Research In Motion's (Nasdaq: RIMM ) BlackBerry devices.
Stream digitally delivered queue titles through TiVo boxes in the near future, if you're a Netflix (Nasdaq: NFLX ) subscriber.
Stream clips from Google's (Nasdaq: GOOG ) YouTube, as well as download select video content from select partners.

The rub, sadly, is that all of these initiatives haven't created a whole lot of demand for TiVo. It has been losing more subs from its expired pact with DirecTV (NYSE: DTV ) than it is gaining on its own.

In a soft economy in which worried consumers are likely to spend more time at home, TiVo is one of the few consumer-facing companies that should be thriving in this environment. But it isn't. Even if TiVo thrilled investors with an unexpected profit in its latest quarter, it came on a 5% decline in service and technology revenue.

How can a company so cool be so stagnant?

Other "thumbs-up" reads to kill time until the earnings report:

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Longtime Fool contributor Rick Munarriz owns shares in TiVo and Netflix. He loves his mother-in-law, too. Really. She never reads this stuff, so it's not as if he has to write that. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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Report this Comment On November 19, 2008, at 3:31 PM, RogerAGrimes wrote:

I, too, love my TIVO. It's one of the few tech devices that actually improved my life. While I can't explain all that went wrong, here are some of the issues:
-Increased cheaper, competition with not enough differentiation.
-TIVO started siding with commercial creators and making it harder for me to bypass commercials. Hint TIVO: It's half the reason I bought the device
-Subscription costs (TIVO should provide content schedules for free, and make money some other way...I mean Google does it); or go way cheaper
-I've often thought of buying more TIVOs for my house, but because each one takes a new subscription, I didn't buy the extra devices. Why not let one subscription cover the house?
-When I went to buy my new HDTV, BestBuy promoted the much cheaper Cox Cable DVR (even though it was sitting beside the TIVO box). TIVO should have cut promotion sales deals with BestBuy and Cable Companies. Why did Cox have to use someone else's box in the first place?
-Even though the new Cox Cable DVR doesn't have nearly as good an interface as the TIVO...it's not that bad and doesn't cost me nearly as much (in either initial purchase or ongoing costs)
I still love my TIVO and I will miss it. But in an environment of increased competition (especially with cable ownership increasing), TIVO needed to fight a price and product war to win instead of little battles. Reminds me of the Novell versus Microsoft battles of yore.
Report this Comment On November 19, 2008, at 4:43 PM, scotnbev wrote:

I have a 40 hour TIVO with the life time service. I would echo the points that Roger makes, and add that TIVO makes it difficult to upgrade the box to a larger hard disk. Sure I can go out hack it for a larger disk, but that is more work and risk then I am willing to do.
What I have finally done is to make a home theater PC. You get:
* free guide
* multiple turners
* easily expanded storage space
* can watch any web base viedo
* view all my personal videos and pictures
* a better remote
What TIVO needs to do is to find services to sell besides the guide - give the guide away and allow storage expansion without having to upgrade boxes.
TIVO was a great idea, but it is currently too limited to compete with other products.

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