Rovi Earnings Preview

Rovi (Nasdaq: ROVI  ) didn't hit the Street's expectations last quarter, but investors hope it will rebound this quarter. The company will unveil its latest earnings on Tuesday. Rovi focuses on powering the discovery and enjoyment of digital entertainment by providing companies a broad set of integrated solutions.

What analysts say:

• Buy, sell, or hold?: Analysts strongly back Rovi, with 11 of 13 rating it a buy and the remainder rating it a hold. Analysts don't like Rovi as much as competitor Apple overall. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.
• Revenue forecasts: On average, analysts predict $197.9 million in revenue this quarter. That would represent a rise of 43.4% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.46 per share. Estimates range from $0.39 to $0.52.

What our community says:
CAPS All-Stars are solidly backing the stock with 89.7% giving it an outperform rating. The community at large concurs with the All-Stars with 85% granting it a rating of outperform. Fools have embraced Rovi, though the message boards have been quiet lately with only 53 posts in the past 30 days. Rovi's bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
Revenue has now gone up for three straight quarters. The company's gross margin shrank by 4.7 percentage points in the last quarter. Revenue rose 43.2% while cost of sales rose 99.3% to $31.9 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q2	Q1	Q4	Q3
Gross Margin	83.5%	84.4%	87.7%	82.3%
Operating Margin	4.4%	14.2%	23.9%	23.1%
Net Margin	(5.6%)	10.6%	47.9%	26.4%

For all our Rovi-specific analysis, including earnings and beyond, add Rovi to My Watchlist.

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