Monday, May 23, 2011

TiVo Inc. (NASDAQ: TIVO): Q1 Earnings Preview 2012

TiVo Inc. (NASDAQ: TIVO) is scheduled to release its first-quarter earnings after the closing bell on Tuesday, May 24, 2011. Analysts, on average, expect the company to post a loss of 31 cents per share on revenue of $41.98 million. In the year ago quarter, the company posted a loss of 13 cents per share on revenue of $43.22 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. The company has reported net losses in nine of the past 10 fiscal years.

In the preceding fourth-quarter, the Alviso, California based company's net loss was $34.4 million, or 30 cents a share, compared to a loss of $10 million, or 9 cents a share, in the year-earlier quarter. Revenue declined to $55.8 million from $68.6 million in the same quarter last year. Analysts, on average, had expected the company to post a loss of 17 cents per share on revenue of $41.41 million. 

At its last earnings call in March, TiVo said that it anticipates net loss to be in the range of $35 million to $37 million, and an Adjusted EBITDA loss to be in the range of $25 million to $27 million. TiVo expects to see lower TiVo-Owned net hardware losses compared to the prior quarter, a sequential increase in R&D spend, and finally, it anticipates total legal expenses, including expenses related to litigation, will significantly increase from its Q4 level of approximately $7.6 million.

Sales of TiVo-branded DVRs have plummeted as cable and satellite companies have added DVR functions to their set-top boxes, allowing them to record television programs and then play them back, as well as pause, fast-forward and rewind.

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. So far, the company has won $600 million in settlements thanks to diligent enforcement of its intellectual property rights to video recording technology. TiVo recently agreed to settle all patent infringement claims with DISH Network (NASDAQ: DISH) for $500 million. The settlement is one of the largest ever over patents. TiVo said it strengthened its hand in trying to get settlements or patent licensing fees from other companies. TiVo is also involved in patent suits with Microsoft Corp. (NASDAQ: MSFT), Motorola Mobility Holdings Inc. (NYSE: MMI), AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) It claims Verizon’s FiOS and AT&T’s U-verse television and Web services infringe patents.

In March, hedge fund company Citadel Investment Group disclosed a stake of more than 5 percent in the digital video recorder maker.

Full Disclosure: None.
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