TiVo (NASDAQ:TIVO) continues its race toward profitability. In the third quarter, the company lowered its loss to $7.4 million, or $0.11 per share. Meanwhile, revenue jumped 73% to $43.3 million, as subscriptions for the company's digital video recording software passed the 1 million mark. Despite the good report, shares were off 12% today after the company's Q4 service sales forecast disappointed analysts (the company projects $20 million, while analysts were looking for $21 million).

TiVo said it would finish the fiscal year with 1.38 million subscribers, ahead of its previous estimate of 1.27 million. The company added 209,000 subscribers in the third quarter, largely due to its arrangement with DirecTV, which accounted for approximately 150,000 of those subscriptions.

While DirecTV has been booming and helping deepen TiVo's penetration, the status of the relationship between the two companies has been the source of worry for some TiVo shareholders. Back in April, Rupert Murdoch's News Corp. (NYSE:NWS) announced that it would acquire a controlling stake in DirecTV's parent company Hughes Electronics (NYSE:GMH). But News Corp.'s NDS Group (NASDAQ:NNDS) has its own digital video recording technology similar to TiVo's. Would Murdoch choose to use NDS' product instead of TiVo's at DirecTV, thus hampering TiVo's growth plans?

It was a good question, and one that was essentially answered last month when TiVo made a partnership deal with News Corp.'s 85%-owned Fox Entertainment (NYSE:FOX), leaving many to believe that the TiVo/DirecTV relationship was, in fact, safe. Considering that DirecTV will account for two-thirds of TiVo's net new subscribers in the fourth quarter, that's definitely a good thing.

Looking ahead, TiVo -- previously a selection in Motley Fool Stock Advisor -- also said it would add 1 million to 1.2 million subscriptions in 2004, bringing its total to 2.5 million subscribers. In addition, service and technology revenues would rise to between $90 million and $100 million for the year.

The third quarter was rock solid, with TiVo gaining considerable momentum. As long as the company can maintain its relationship with DirecTV, TiVo's a safe bet to deliver shareholder value for years to come.

Talk TiVo on (where else?) the TiVo discussion board! Only at Fool.com. Jeff Hwang can be reached at JHwang@fool.com.