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TiVo's Rewind Button Is Stuck

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Patent rich but subscriber poor is no way to get through life, TiVo (Nasdaq: TIVO  ) .

The DVR pioneer posted another quarterly loss last night, fueled by even more net cancellations.

Service and technology revenue fell nearly 9% to $41.4 million, even though it was the company's first sequential uptick in six quarters. The carnage wasn't pretty on the bottom line where TiVo's deficit more than tripled to $0.30 a share. It's TiVo's ninth consecutive quarterly loss.

This would be easier to stomach if TiVo were actually gaining more couch potatoes than it's losing -- but it's not.

Lucy wants to be in the show, Ricky!
TiVo proudly proclaimed that the quarter's gross additions climbed 30% over the previous fiscal year's holiday quarter. Unfortunately for TiVo, Lucy Ricardo, and Ethel Mertz, cancellations are chocolate bonbons speeding down the conveyor belt. TiVo closed out the quarter with 55,000 fewer direct subscribers than it had three months ago -- and 199,000 less than it watched over when the fiscal year began.

TiVo continues to make strides with its patent-rich portfolio. It's getting closer to making EchoStar (Nasdaq: SATS  ) pay for going all Frank-N-Furter on its Time Warp patent, and it has AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) in its litigious crosshairs. There are also several companies gunning for TiVo, but it seems as if the company has more to gain than lose in the courtroom.

Along the way, TiVo is trying to set its service apart from the growing assortment of home theater gadgetry.

"Consumers are now beginning to understand TiVo's differentiated product offering," CEO Tom Rogers notes in explaining the spurt in gross additions. It's a fair point, though it feels hollow when you're applauding the arrival of 60,000 new subscribers without discussing the exodus of 115,000 now former subscribers.

TiVo is now down to 1.266 million direct subscribers, and that includes 310,000 lifetime subs that definitely aren't kicking any more coin TiVo's way and they may or may not be fanatical about their usage.

You have to give TiVo some style points for striking promising technology licensing deals globally and using its data-mining prowess to market viewer behavior ratings to advertisers.

However, until TiVo can turn its subscriber count around or at least return to profitability there's not a lot to see here in live mode.

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

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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, though he does have a pair of TiVo boxes with lifetime subscriptions in his home. 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.

Read/Post Comments (6) | Recommend This Article (2)

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 March 02, 2011, at 3:03 PM, bigdon2950 wrote:

    Tivo has been fighting for years to get what is rightfully there's IMO. TiVo has said it will be entitled to about $300 million in

    damages and contempt sanctions through July 1, 2009, and it will

    seek more cash for infringement after that date. That’s in

    addition to $100 million Dish paid TiVo after the original

    appeals court ruling.

    "Dish may have to pay TiVo more than $2 billion to settle

    the case 2009-1374, according to Craig Moffett, an analyst at Sanford C.

    Bernstein in New York. If Dish were required to silence all its

    DVRs, it would face a worst-case cost of $3 billion, he said"

  • Report this Comment On March 02, 2011, at 4:08 PM, johnd23 wrote:

    It is good to go after the patent money but it seems to be a distraction. Tivo needs to keep there eye on the ball and polish their product. There are many way they could make Tivo even better than it is. Most of them are not that hard to do.

    What customers are they loosing?

    What is happening with the Directv deal?

  • Report this Comment On March 02, 2011, at 8:13 PM, cfrdog wrote:

    Rick I think you are missing the boat on this. Of course TIVO is losing subs - other companies have stolen their technology and made it cheaper. Fast forward to court victories - now these crooks need to pay Tivo on a go forward basis. Tivo could then start to change its business model some - perhaps drop the direct subscriber method and just license their technology and sell their boxes. I don't know why the market gave them a 10% haircut today, everybody already knew they were going to post losses. Until this court stuff is settled thats they way it will be.... then you grow again....

  • Report this Comment On March 03, 2011, at 1:01 PM, nhlpens66 wrote:

    All TiVo has to do is keep current with IPTV trends. They were one of the first devices to ink a deal with Netflix.

    The interface is the best!

    However, they are loosing touch with the competition from the likes of Roku and Boxee. Their devices have "channels" with which to choose apps that provide content. These are essentially deals with major Networks and Studios. Two prominently missing apps are Hulu+ and Amazon Prime. Now the iPad 2 can throw content through an HDMI port. Apple should just buy the TiVo IP portfolio and TiVo brand and be done with it. They make great hardware too, you know.

  • Report this Comment On March 04, 2011, at 2:23 AM, Stockwatcherpdx wrote:

    Honestly TiVo is more concerned with it's litigations than focusing on the need to truely revolutionize their existing product line. It's hard to compete out there when you have cable companies like Comcast offering a similar, yet poorer, experience. I've been a enthusiast of Tivo's for quite some time. Even for me as a dedicated 8+ year subscriber I still find myself thinking. Gosh, I'm paying for cable so that I can use a TiVo box and I missing out on OnDemand features and caller ID capabilities and even now cable companies are offering you a cloud experience where what's on your DVR at home can be accessible any where else you might be. Honestly I got my TiVo for the "other functions it could provide to me such as my Netflix and streaming music from my desktop and photo sharing. But my Blu-ray player does Netflix better than my TiVo does. Apple Tv provides better streaming functionality than I could have hoped for from my TiVo. Seriously TiVo has had it's day where it was on top of it's game. But you don't stay there by putting a new case on a existing product. TiVo can still be creative and be again in the top ranks. But it will take vision. Honestly the new setup TiVo premiere seems a bit desperate. Yes there is more Internet functionality and it's faster. But really does it do that much more that prior TiVo boxes couldn't. TiVo please innovate.

  • Report this Comment On April 22, 2011, at 8:20 PM, johnd23 wrote:

    Tivo is like a 1950s car competing with 1940s cars

    They could put a web browsers /wireless keyboard and go after all the video on the net. The Netflix interface is very marginal. Tivo should be able to do anything my laptop can do with Netflix or any other video server. You should also be able to run your facebook and webmail as well. The Ipad interface app should be ported to any local networked computer. These are not big things to do but Tivo does not seem to be doing them and if they do not run fast they may be passed.

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