I bash stocks in this weekly column.
I'm no brute, and I don't always get it right. Sometimes I wish that I could hit pause, rewind a few months, and do it all over again.
There's no malice in my swings. I don't even begin to rip into a stock unless I have three companies that I think would be superior replacements.
Who gets tossed out this week? Come on down, TiVo
So that's what the "thumbs down" button is for
After a long and very profitable ownership experience, I finally sold my TiVo shares last month.
With its shares catapulting to the mid-teens after TiVo emerged victorious once again in its legal battle with DISH Network
I didn't get out at the top. TiVo shares have continued to inch higher over the past two weeks, even hitting a new nine-year high yesterday. A Janney Montgomery Scott analyst even raised his price target on the stock this week -- from $22 to $26 -- based on the juicy future of licensing revenue from DISH and other cable and satellite television providers that wish to tread on TiVo's DVR-related patents.
I get all this. It's actually why I held on this long. However, TiVo outside of the licensing streams is a disaster. Despite its ubiquitous brand, the digital-video recorder pioneer closed out its latest quarter with 2.6 million subscribers. That is 730,000 fewer TiVo-tees than it watched over a year ago. Yes, the company is raking in sweet licensing revenue from the largest cable and satellite television companies, but service and technology revenue has still fallen by 7% over the past year.
Last month's rollout of a new box isn't much of a game- changer, apparently. TiVo has posted losses in each of the past five quarters, and analysts see more red ink through at least the next two years.
If that's not enough of a party pooper, let me get even bleaker about TiVo's future. If its future rests in licensing its time-warp technology to cable providers, it had better make sure that its partners are growing. Comcast
This is even more problematic for TiVo than you may think. After all, if I can watch an episode of Lost -- for free on my laptop or iPad -- whenever I want, I don't need to remember to set my DVR. I also don't need to pay TiVo -- or any TiVo licensee -- $13 a month. Online streaming through HBO Go, Netflix
Don't you get it? You are the DVR.
As I do every week, I don't talk down a stock unless I have three alternatives that I believe will outperform the company getting the heave-ho. Let's go over the three fill-ins.
(Nasdaq: AAPL): It's not a surprise to find that the top third-party apps when the iPad debuted over the weekend were Netflix's streaming service and an app for free on-demand viewing of ABC shows (like Lost). Productivity apps may be the big Mac sellers. Games may rule on the iPhone and iPod touch. However, the iPad has become a multimedia tablet, with the TiVo-crushing ability to stream a lot of free video on demand.
Sirius XM Radio
(Nasdaq: SIRI): Unlike TiVo's shrinking minions, satellite radio is on the rise. Sirius XM expects to land 500,000 net new subscribers this year alone. A month of Sirius or XM at $13 a month (before the nearly $2 music royalty fee) may have the same price point as a TiVo subscription, but it's a service where usage won't decline unless we seriously curb our driving habits or coast-to-coast connectivity becomes a reality. I like Sirius XM's chances.
(Nasdaq: DISCA): With 1.5 billion cumulative subscribers in 170 countries, Discovery is so much more than just a stateside mogul. Content will be king in the digital migration, and the parent company behind the Discovery Channel has some pretty cool channels in the works, including partnerships for 3-D and kid programming.
Thanks for the memories, TiVo.
Longtime Fool contributor Rick Munarriz wonders how long he'd keep his two TiVo boxes if they weren't tethered to lifetime subscriptions. He does own shares in Netflix. Rick 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.