TiVo Wants to Fast Forward

TiVo (TIVO-NASDAQ) has posted its quarterly results.  Keep in mind that this is also the day it launched its "Unbox" service expansion with Amazon.com (AMZN-NASDAQ).  Service and Technology revenues increased 22% year-over-year to $57.4 million in the fourth quarter; Net loss was $18.7 million in the fourth quarter, compared to a net loss of $21.1 million in the year-ago quarter; Adjusted EBITDA loss was $14.2 million in the fourth quarter, compared to a loss of $19.9 million in the year-ago quarter; TiVo-Owned subscriptions increased 16% year-over-year to end the year at 1.7 million.

In the fourth quarter, TiVo-Owned subscription gross additions were 163,000, increasing overall TiVo-Owned subscriptions to 1.7 million. As expected, TiVo reported a net decline to 2.7 million DIRECTV TiVo subscriptions during the period as DIRECTV deployed fewer TiVo boxes and as there was continued churn of existing DIRECTV TiVo subscriptions. Cumulative total subscriptions as of January 31, 2007 were up slightly from last quarter to 4.4 million.  It is also not going to focus on mail-in rebates any longer.

TiVo plans to advertise throughout the year with a far more extensive effort to educate the market on TiVo’s brand and the service features.  It aims for its financial model will move us significantly closer to Adjusted EBITDA break-even for Fiscal Year 2008 and improve the perception of the Company’s long-term financial prospects.  The company will focus this year on launching a lower-priced, mass appeal High Definition product.  Its service on Comcast is expected to launch in its initial market in the near-future and Cox is targeted for initial market availability later this year.  The company ended with $128.76 million in cash and equivalents and its total liabilities are carried at $194.95 million.

Steve Sordello, CFO of TiVo: "It is TiVo’s goal to continue to invest for long-term growth, while improving our bottom-line performance. To that end, we plan to continue to invest aggressively in our product while transitioning from hardware subsidies to a more advertising driven approach toward subscription acquisition. We expect this will lead us to get significantly closer to Adjusted EBITDA breakeven for the full-year Fiscal 2008. This goal assumes TiVo-Owned gross adds roughly equivalent to last year and accounts for current expectations related to litigation costs and currently expected R&D levels."  For the first quarter of Fiscal 2008, TiVo anticipates service and technology revenues in the range of $57 million to $58 million, a net loss of $4 million to net income breakeven, and an Adjusted EBITDA profit of $1 to $5 million.  TIVO had a market cap of $594 million as of the close.

Mr. Rogers, CEO of TIVO: "TiVo made substantial progress in the fourth quarter in achieving a number of major milestones that will help set the stage for a strong 2008 Fiscal Year."

The stock closed up 3.3% at $6.14 and it has a $594 million martket cap; it is up 2% at $6.27 in after hours and has traded between $5.05 and $9.49 over the last 52-weeks.  TIVO’s short interest was 13.3 million shares as of February, which is 8.5 days-to-cover more than 15% of its float.

Jon C. Ogg
March 7, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.