The house rules are simple in this weekly column.

  • I bash a stock that I think is heading lower.
  • I offset the sting by recommending three stocks as portfolio replacements.

Who gets tossed out this week? Come on down, TiVo (Nasdaq: TIVO).

I'm a fan of TiVo, with a pair of the company's DVRs surfing the boob tube in my home. I have also always been impressed with my occasional conversations with CEO Tom Rogers.

However, I'm also a realist. It's hard to sugarcoat TiVo's crummy fiscal third-quarter report from last night. It's bad. Things aren't going to get better anytime soon.

Service and technology revenue fell 12% to $41.3 million. TiVo's net loss tripled to $0.18 a share. Analysts were expecting a little more on the top line and little less red on the bottom.

TiVo's problem rests in the growing ranks of former subscribers. There are now just 2.3 million TiVo heads out there, a far cry from the 2.7 million that were still around a year ago.

You can't blame the company for trying. It's been testing lower initial investments by couch potatoes for new TiVo boxes, in exchange for higher monthly ransoms. I don't see it as a game-changer, though. Besides, TiVo's monthly churn has grown from 1.7% to 2% over the past year.

Yes, TiVo has a lot of neat things going for it. The DVR pioneer keeps spanking the DISH Network (Nasdaq: DISH) gang in the courtroom over TiVo's patents. A big payday is within reach. TiVo's also striking some incremental deals overseas.

Unfortunately, at the end of the day, TiVo's still shaking off subscribers and spilling red ink. All nine analysts with crystal balls see another steep loss for TiVo next year.

I'll have to give Rogers some credit here. When I last spoke to him two months ago, TV gadgetry by Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG) were buzz gobblers. Apple TV and Google TV don't do what TiVo does, but all three are ultimately about on-demand experiences. He argued that TiVo stands out because it's the one with years of experience working with broadcasters and cable providers. His vision has paid off. Apple TV doesn't appear to be as big a hit as it could have been, and network after network is slamming the door on Google TV.

However, at the end of the day, Apple and Google are growing and profitable companies despite their couch potato misses. TiVo can't say that.

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.

  • China Digital TV (NYSE: STV): If you want to play the television market, pack a passport. The cord-cutting among stateside subscribers is real, and there's going to be a bloodbath in digital delivery. There's no need to pick the lightest bleeder when you can just buy the leading maker of smart cards that all of China's televisions will need by 2015. You don't have to wait that long for this play to pay off. Revenue in its latest quarter soared 74%, as it shipped nearly 4 million smart cards. Earnings more than doubled. Income investors should also note that a pair of chunky dividend distributions will take place next year.
  • Sirius XM Radio (Nasdaq: SIRI): If you're going to buy into subscriber-based entertainment, make sure that it's a company that's growing and profitable. Sirius XM didn't fit the bill on either front during the darkest stretch of the recession early last year, but it's now in the black and is working on its sixth consecutive quarter of sequential subscriber growth. Sirius XM isn't cheap, but at least it's heading in the right direction.
  • DIRECTV (NYSE: DTV): If you want to harvest the domestic couch potato -- against my wishes -- you may as well stick with the class act of this space. Unlike DISH TV's patent-defying shenanigans, DIRECTV has been playing along with TiVo for years. The market leader in satellite television also has a thriving business in Latin America that is growing faster than its stateside subscribers. Armed with exclusivity for the NFL's Sunday Ticket premium football package, it's hard to bet against DIRECTV. Revenue and earnings grew 10% and 49%, respectively, in its latest quarter.

I'm sorry, TiVo. We can't all do the Time Warp again.

Google is a Motley Fool Inside Value recommendation. Google and China Digital TV Holding are Motley Fool Rule Breakers selections. Apple is a Motley Fool Stock Advisor pick. The Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.