Thursday, November 18, 2010

TiVo Inc. (NASDAQ: TIVO): Q3 Earnings Preview 2011

TiVo Inc. (NASDAQ: TIVO) is scheduled to release its third-quarter financial results after the closing bell on Tuesday, November 23, 2010. Analysts, on average, expect the company to post a loss of 17 cents per share on revenue of $41.59 million. In the year ago quarter, the company posted a loss of 6 cents per share on revenue of $47.05 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. 

In the preceding second quarter, the Alviso, California based company's net loss was $15.3 million, or 13 cents a share, compared to a loss of $2.7 million, or 3 cents a share, in the year-earlier quarter. Revenue dropped to $51.5 million from $57.6 million in the same quarter last year. Analysts, on average, expected the company to post a loss of 15 cents per share on revenue of $41.93 million. 

At its last earnings call in August, TiVo said that it expects a third-quarter loss in the range of $19 million to $21 million. The company expect service and technology revenues of $40 million to $42 million. Also, the company anticipates adjusted EBITDA to be in the range of negative $11 million to negative $13 million

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. The company has been involved in patent infringement litigation with DISH Network (DISH) and Echostar (SATS) since 2004.  Last month, the DVR maker TiVo issued a statement indicating that the Patent and Trademark Office ruled in favor of TiVo regarding a patent infringement case against competitor Echostar. Following this finding, TiVo said it was confident that it would win the legal battle.

In September, TiVo Inc. and Samsung Electronics Co., Ltd. announced that they will collaborate to develop an advanced, TiVo-ready, high definition personal video recorders or PVR, set-top box for digital video broadcasting operators. Samsung and TiVo plan to bring this offering to market in 2011.

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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