You're Going the Wrong Way, TiVo

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Every three months, TiVo (Nasdaq: TIVO  ) dies a little bit.

Last night's fiscal second-quarter report was another dud. Service and technology revenue clocked in at $42.1 million, less than the $43.2 million it reported three months ago -- and far less than the $48.8 million it delivered a year ago.

Red ink? You know it. TiVo posted a deficit of $0.13 a share, its sixth consecutive quarterly loss. Armed with $242.6 million and no debt, fiscal shortcomings aren't a threat to TiVo's survival. However, TiVo's very model is on high alert.

Here's the church. Here's the steeple. Open it up, and where are the friggin' people?

TiVo closed out the quarter with 2.4 million TiVo subscribers. A year ago, there were 3.1 million TiVo heads.

Isn't that all that you need to know?

There was a time when Netflix (Nasdaq: NFLX  ) had fewer subscribers than TiVo. It's at 15 million today. That time -- believe it or not -- was just five years ago. At that time, Sirius XM Radio (Nasdaq: SIRI  ) watched over a little more than half of TiVo's base. It's at 19.5 million -- and counting. Sure, it went to snap up XM along the way, but the directional arrows don't lie.

If TiVo is every inch the cool brand that it thinks it is, where are the people? I mean, I'm wiggling my crossed fingers, and I don't see them at all.

TiVo will argue that last night's performance exceeded its earlier guidance. The company points to deals. Heavy hitters Cisco (Nasdaq: CSCO  ) and DirecTV (NYSE: DTV  ) are putting out set-top boxes with licensed TiVo software. TiVo is even teaming up with NASDAQ (Nasdaq: NDAQ  ) to incorporate TiVo-esque elements to its iconic Marketsite Video Wall facing Times Square.

So many handshakes. So few net new subscribers.

TiVo's guidance isn't really much of a surprise. Another loss is targeted for the current quarter, and its top-line guidance calls for another sequential decline.

I threw in the towel as an investor earlier this year, but that's not why I'm bitter. I would love to see the company thrive without me. I want to see coolness rewarded. I want to see innovation -- including the new Premiere boxes and the new controller that was introduced this week with a slide-out QWERTY keyboard -- patted on the back.

I want to turn over my intertwined fingers and see people -- for a change.

What will it take for TiVo to win back its mojo? Share your thoughts in the comment box below.

Nasdaq OMX Group is a Motley Fool Inside Value selection. Netflix is a Motley Fool Stock Advisor pick. Motley Fool Options has recommended writing covered calls on Nasdaq OMX Group. Try any of our Foolish newsletter services, free for 30 days.

Longtime Fool contributor Rick Munarriz thinks life is too short to not fly past unwanted commercials on TV. He does not own shares in any of the stocks in this article, except for 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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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 26, 2010, at 3:43 PM, GoOtto4Nic8 wrote:

    If and when the U.S. patent system actually rewards Tivo as the DVR inventor, Tivo will thrive. If not, then yes, Tivo will die, but so will many other technologies yet to be born. To paraphrase your opening sentence, "Every time the CAFC issues another nonsensical ruling that seem to almost universally reward the deep pockets (on whichever side of the case they happen to be), the U.S. patent system dies a little bit."

  • Report this Comment On August 26, 2010, at 8:34 PM, leaderoftheback wrote:


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