TiVo's profit quadruples to $3.6M on lower costs

Digital video recorder pioneer TiVo reported Wednesday that its first-quarter net income more than quadrupled as operating costs, most notably for marketing and research, declined.

Alviso-based TiVo Inc. earned $3.6 million, or 4 cents per share, for the three months ended April 30, up 336 percent from $835,000, or 1 cent per share, in the same period a year earlier.

Revenue for services and technology totaled $54.9 million, down from $58.1 million for the same period last year.

Analysts, on average, had expected TiVo to post a loss of 1 cent per share on service and technology sales of $55.6 million, according to a poll by Thomson Financial.

But TiVo had 3.8 million total subscribers in the first quarter, compared with 4.3 million in the same period a year ago.

Chief Executive Tom Rogers said TiVo's recent partnerships with cable and satellite TV providers, its successes defending its patents and its audience research business, called StopWatch, have generated excitement. This quarter should calm concerns that TiVo can pull off a standalone set-top box business, he said.

"We've really put some effort in the last few quarters into showing that the standalone business could be managed, particularly with respect to marketing expenditures ... in a way that no one should have to worry about it being a drain that clouds the enthusiasm about these other areas," Rogers said in an interview with The Associated Press.

TiVo rarely posts a profitable quarter and said Wednesday it expects a net loss of $2 million to $4 million in the current quarter on service and technology revenue of $53 million to $55 million.

TiVo shares closed at $8.10, down 16 cents or 1.9 percent, on Wednesday. Shares regained 2 cents in after-hours trading.

Kaufman Brothers analyst Todd Mitchell said TiVo has done a 180-degree turnaround in the past few quarters.

Its agreements with Cox Communications Inc. and Comcast Corp. show it can grow as a company, and its ability to cut marketing costs proves positive cash flow is possible, he said.

"That's been their problem forever: It just costs too much money to acquire subscribers," Mitchell said.

"How are they going to get bigger? I think having access to the Cox and Comcast subscriber bases eventually is the answer to that. That's one-third of the entire cable universe, and that drives the overall subscriber base, which is important for their advertising business," Mitchell said.