TiVo Posts Quarterly Profit But Has Unstable Future
Posted on: Thursday, 28 August 2008, 12:49 CDT
On Wednesday, TiVo Inc. posted a quarterly profit for only the third time in its 11-year history by boosting margins on hardware and reducing marketing costs in its fiscal second quarter.
This marked the first time TiVo has had back-to-back quarters of profits. The company, based in Alviso, California, reported $2.9 million in net income, or 3 cents per share, compared with a loss of $17.7 million, or 18 cents a share, in the year-ago period.
Analysts had expected a loss of 2 cents per share in the quarter that ended July 31.
TiVo shares fell sharply, however, in extended trading after the company said its revenue in the current quarter would fall short of analysts' current expectations, at $49 million to $51 million. Analysts had expected $57 million.
The company said it expected a net loss in the range of $7 million to $9 million in this quarter.
TiVo's revenue rose 4 percent to $65.2 million in the just-concluded period, including $53.5 million in services and technology. The breakout for services and technology, which excludes hardware sales, was below the nearly $55.4 million analysts were expecting and short of the $56.5 million in the same period last year.
Increased competition from generic recorders from cable and satellite operators have dropped TiVo's subscriber base and the company has been focusing on reducing subscriber acquisition costs to offset the revenue decrease.
The average cost was $135 in the quarter, slightly up from $116 in the previous period and significantly lower than the $758 in the year-ago period. TiVo said it now has 3.6 million subscribers, compared with 4.2 million a year ago.
“The slight quarter-to-quarter increase resulted from seasonal variations, including heavier marketing for Mother's Day, Father's Day and graduation,” said TiVo Chief Executive Tom Rogers.
TiVo’s distribution partner, Comcast Corp., has expanded a TiVo package to Connecticut, beyond an initial deployment in Massachusetts and New Hampshire. Full marketing should begin this year, allowing TiVo to boost subscribers while Comcast bears much of the marketing expenses, Rogers said.
Cox Communications Inc. should also begin by year's end, while Seven Media Group has introduced TiVo to the Australian market.
Rogers said over time, the subscriber growth would be much more a function of cable and international distribution deals. "We've had a real focus on trying to drive our subscriber acquisition cost numbers down. A lot of that is being able to develop better opportunities for third parties to market us."
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Source: redOrbit Staff & Wire Reports
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