Tuesday, May 25, 2010

TiVo Inc. (NASDAQ: TIVO): Q1 Earnings Preview

TiVo Inc.(NASDAQ: TIVO) is scheduled to release its first-quarter earnings after the closing bell on Tuesday, May 25, 2010. Analysts, on average, expect the company to report a loss of 16 cents per share on revenue of $42.84 million. In the year ago period, the company reported a loss of 4 cents per share on revenue of $48.52 million.

TiVo Inc., together with its subsidiaries, provides television technology and services that include digital video recorders (DVRs) in the United States and internationally. The company offers subscription-based TiVo service, which enhances home entertainment by providing consumers with a way to record, watch, and control live television, as well as enables to receive movies and television shows from cable, broadcast, and broadband sources in one interface. As of January 31, 2010, it had approximately 1.47 million subscriptions to the TiVo service.

In the preceding fourth quarter, the Alviso, California-based company reported a wider net loss of $10.2 million or $0.09 per share, compared to a loss of $3.6 million or $0.04 per share in the prior year quarter. Quarterly revenue increased  16% to $68.5 million from $59.2 million in the year-ago quarter. Analysts, on average, expected the company to report a loss of $0.12 per share on revenue of $47.45 million for the fourth quarter.

TiVo-owned subscription gross additions were around 46,000 for the fourth quarter, down from 59,000 gross additions in the year-ago quarter. The TiVo-owned monthly churn rate was a drop of 2.6%, compared to a 1.3% decrease last year.TiVo-owned Average Revenue Per Subscription or ARPU per month dropped to $7.58 from $7.85 in the prior year quarter. Overall, TiVo-owned subscriptions ended the quarter at 1.47 million. Cumulative total subscriptions were about 2.61 million.

For the first quarter of fiscal 2011, TiVo anticipates a net loss in the range of $19 million to $21 million, and service and technology revenues in the range of $41 million to $43 million. The Street expects a loss of $0.05 per share on revenue of $48.81 million for the first quarter.

It appears that TiVo’s value is correlated far more to disputes over patent infringements rather than fundamentals, as operationally TiVo is expected to lose money both this year and the next. Recently, the shares of the company lost over 40% of its value after a U.S. Court of Appeals vacated an earlier ruling in a patent case. Now, Dish Network Corp. and EchoStar Corp. are allowed to have their case heard again.

Industry experts believe that Google might be interested in TIVO in order to accelerate its TV ambitions. The online search giant has officially launched Google TV recently. Alternatively, given the threat posed by Google in the living room, Microsoft or Cisco could become interested buyers.

In terms of stock performance,TiVo Inc. shares have gained nearly 24% over the past year.

Full Disclosure: None.
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