There's more to TiVo (Nasdaq: TIVO) than a bucket of big-money lawsuits.
The company proved it last night in a terrific second-quarter report. Sales jumped 19% year over year, and the $0.17 net loss per share was smaller than anticipated. The centerpiece of the report was $15.6 million in technology-license revenue, more than double the year-ago figure, and now a solid one-fourth of TiVo's total sales.
These software and technology licenses are very important to TiVo's future. Sure, the company is still selling set-top boxes, but the subscriber numbers are dwindling in that segment, and management clearly has its sights set elsewhere.
As an example of TiVo's softer strategy, Virgin Media (Nasdaq: VMED) recently started rolling out TiVo-branded media management software across its network of digital cable subscribers. Virgin Media CEO Neil Berkett praised the new offering thusly: "I think TiVo will do to our video business what Docsis 3.0 did to our broadband business. I think it will significantly change our brand, our perception and our ongoing delivery."
That said, hardware isn't entirely a thing of the past. TiVo is currently manufacturing satellite TV boxes for DIRECTV (Nasdaq: DTV), and the satellite guys are supposed to announce deployment of these "in the near future." This arrangement only covers North America so far, leaving an additional cache of untapped potential growth in Latin America, where DIRECTV is a household name.
All of this adds up to the biggest one-day jump TiVo has seen since April, when shares moved 51% overnight on a legal settlement. Its long-running intellectual property battle with DISH Network (Nasdaq: DISH) and its infrastructure cousin EchoStar Communications (Nasdaq: SATS) laid the foundation for the very same licensing-based business model into which TiVo is shifting right now.
Fellow Fool Rick Munarriz keeps wondering when TiVo might get its mojo back. I think the mojo is already there in spades, if you know what to look for. Our watchlist feature can help you spy the signs: Just click here to add TiVo to your own watchlist, and then marvel at the wealth of news and Foolish analysis you'll have flowing your way.
