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TiVo (Nasdaq: TIVO  ) may no longer be a high-octane growth stock, but it's still doing a lot of things right.

The patent-hugging pioneer of digital video recorder (DVR) technology posted mixed fiscal fourth-quarter results last night. Service and technology revenue fell 17% to $48.5 million, but it posted a narrower loss of $0.04 a share, scaling back nicely on its sales and marketing expenses.

TiVo missed Wall Street's expectations on the top line, but creamed on the bottom. Analysts felt the company would post a loss of $0.10 a share for the period, in line with TiVo's original guidance.

Tugging back on marketing outlays naturally finds TiVo adding fewer direct subscribers, with 1.654 million on the rolls currently, practically unchanged from the 1.658 million reported three months earlier. In addition to direct subscribers, the company has 3.3 million TiVo subscribers, with roughly half of those arriving indirectly through deals with cable and satellite television providers like Comcast (Nasdaq: CMCSA  ) and DirecTV (NYSE: DTV  ) .

EchoStar (Nasdaq: SATS  ) isn't on that list. The company is still flirting with its ability to work around TiVo's patents, even after paying nearly $105 million in lawsuit proceeds last year (and possibly more money at stake).

Would it be great to see TiVo grow its subscriber base again? Absolutely. If Netflix (Nasdaq: NFLX  ) is beefing up its audience of couch potatoes, one has to wonder why companies like TiVo and DISH Network (Nasdaq: DISH  ) are subtracting net subscribers instead of adding them.

However, the key takeaway in the quarter is that TiVo is keeping its costs in check. If it's beefing up its net margins now, things can get only better as the company continues to strike licensing deals, warm up to sponsors, and establish itself as television's technological gateway.

It won't get there overnight. It doesn't have to. With $207.3 million in cash and short-term investments, TiVo has more than $2 a share in cash on its debt-free balance sheet. That grants TiVo the flexibility to hold on to that pause button for a long time.

Take a nap, couch potato. TiVo will still be there when you wake up.

More tales of the TiVo-lution:

Netflix is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz thinks life is too short for pause buttons. He owns shares in TiVo and Netflix. 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 March 03, 2009, at 4:50 PM, SteamedCrab wrote:

    "Would it be great to see TiVo grow its subscriber base again? Absolutely. If Netflix (Nasdaq: NFLX) is beefing up its audience of couch potatoes, one has to wonder why companies like TiVo and DISH Network (Nasdaq: DISH) are subtracting net subscribers instead of adding them."

    As much as I love the TiVo product, I'm not sure where they go long term for new customers. The cable companies will give you an equivilent DVR for free with a subscription, where you need to spend $199-$299 up front and then pay a subscription. Sure, TiVo has a better whiz-bang system, but that's a steep entry fee, especially when people are going to start thinking about all the crap they buy.

    So in the short term, it makes sense that TiVo may sustain or lose a few customers as a small percentage get tired of a monthly fee and cut back.

    Long term, patents don't last forever.

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