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.
Good news
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.
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Apple
(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. -
Discovery Communications
(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.
