TiVo has Q3 profit on settlement

Excluding EchoStar award, loss narrows on lower costs

By Danny King -- Video Business, 11/25/2008

NOV. 25 | TiVo had a fiscal third-quarter profit on a $105 million gain from its April settlement of a patent-infringement lawsuit with EchoStar. Excluding the settlement, TiVo’s loss narrowed as it cut hardware costs by reducing its direct sales of set-top boxes.

TiVo’s net income for the quarter ended Oct. 31 was $100.6 million, or 98¢ a share, compared with a loss of $8.27 million, or 8¢, a year earlier, as its service and technology revenue fell 11% to $51.7 million, the digital-video recorder maker said in a statement today. Excluding the litigation gain, TiVo lost about $900,000. The company was expected to lose 6¢ a share on $50.7 million in service and technology sales, the average analyst estimates in a Thomson Financial survey. TiVo in August said it would lose between $7 million and $9 million on sales of between $49 million and $51 million.

TiVo has been trying to augment sales of its DVRs by striking partnerships allowing content providers to send TV shows and movies directly to customers’ TVs using the DVRs. Last month, TiVo reached agreements with Netflix and Jaman.com allowing video-streaming from those companies’ titles directly to TV sets through TiVo set-top boxes. In September, TiVo and U.S. satellite-TV service leader DirecTV said they would co-develop a broadband-enabled high-definition DVR that would be launched by the end of next year.

“Our mass distribution strategy continues to gain momentum,” TiVo CEO Tom Rogers said on a conference call with analysts today. Rogers added that, with its Netflix and Jaman.com agreements, “TiVo has continued to develop the ultimate viewer experience.”

TiVo also cut hardware costs to 25% of total sales from 39% a year earlier by selling or giving away fewer set-top boxes through promotions than last year. The company is looking to further reduce expenses, announcing last week that it would cut 7% of its workforce.

Additionally, sales may grow on the company’s agreement with No. 1 U.S. cable company Comcast, which this year started offering TiVo set-top boxes to its New England-area customers and will do the same for Chicago-area customers early next year. TiVo has a similar agreement with Cox Communications subscribers in some markets.

TiVo today also started a Web site that customers can access to browse TV shows and schedule recordings using their mobile phones.

With Rogers citing what he said will be “a weak holiday season for the consumer-electronics industry,” the company said its fiscal fourth-quarter loss will widen to $10 million to $12 million from $6.36 million a year earlier while service and technology revenue will be as much as $49 million, less than analyst estimates of $55.5 million.