Poor, misunderstood TiVo
The digital video recording pioneer's first-quarter results run against the trend, and not in a good way. Sales fell 10% year over year to $54.9 million and last year's $0.04 of earnings per share turned into $0.04 of losses per share. TiVo has 16% fewer paying customers now than they did a year ago amid a monthly 1.4% churn rate (or about 4.3% per quarter). No respect.
This comes at a time when DVD mailer Netflix
TiVo CEO Tom Rogers says that he's suffering from a marketing problem. "The biggest confusion that's been sowed out there in the marketplace about TiVo is that the cable industry generic DVR is the equivalent," Rogers told analysts in the earnings call.
The challenge right now is to spread the word that a recent-generation TiVo that connects both to your TV signal feed and to a broadband Internet connection can do much more than a generic DVR. Through partnerships with Amazon.com
Another recent deal with on-demand expert SeaChange International
But these advantages are not obvious to a consumer who already talks about TiVoing "American Idol" on his no-name DVR, provided by the cable company. And the SeaChange partnership is too new to have produced any revenue-making cable contracts yet. No respect.
But TiVo's balance sheet looks debt-free, cash-rich, and very healthy. Despite the GAAP losses, the company actually saw $3.4 million of positive free cash flows this quarter. There may be legal windfalls waiting around the corner, and brand-new distribution deals feeding off of that. Oh yes, I think TiVo will do just fine -- even if nobody respects 'em right now.
Further time-shifted Foolishness:
Fool contributor Anders Bylund owns shares in Netflix, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.