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TiVo's Q2 loss widens; results beat analyst views

Thu, 08/25/2011 - 8:20am
The Associated Press

TiVo on Wednesday said its second-quarter net loss widened as higher expenses overshadowed increased revenue. The results were better than analysts expected, though, and TiVo shares climbed more than 8 percent in after-hours trading.

For the three months that ended July 31, TiVo – a seller of set-top boxes that record, pause, rewind and fast-forward live TV and licensor of its technology to cable companies for their own set-top boxes – reported a loss of $19.6 million, or 17 cents per share. That compares with a loss of $15.3 million, or 13 cents per share, in the year-ago quarter.

Analysts polled by FactSet expected a loss of 20 cents per share.

Unlike in the previous quarter, TiVo did not receive any litigation proceeds from Dish and EchoStar. The companies agreed in May to pay TiVo $500 million to settle a patent suit TiVo initially filed against Dish in 2004. Dish spun off EchoStar in 2008, and both are controlled by Dish CEO Charles Ergen. TiVo had received $300 million of this by the end of the first quarter, and the rest is slated to be paid out in six annual installments between 2012 and 2017.

Sales of TiVo-branded DVRs have plummeted as cable and satellite companies have added DVR functions to their set-top boxes. Lately, TiVo has concentrated more on making deals with cable companies that pay to license its technology.

During the quarter, Alviso, Calif.-based TiVo's revenue rose 19 percent to $61.2 million – higher than the $55.8 million analysts expected.

TiVo's largest revenue source, service revenue, fell 5 percent to $34 million, while technology revenues more than doubled to $15.6 million and hardware revenue climbed 22 percent to $11.6 million.

At the end of July, TiVo had 1.9 million subscribers to both its own service and ones using TiVo technology licensed by cable companies, compared with 2.4 million a year earlier. The number of people that subscribe directly to TiVo fell to 1.2 million from 1.4 million.

The company's expenses shot up 29 percent to $53.2 million, which CEO Tom Rogers said in an interview stemmed partly from costs related to the rollout of licensing deals with cable companies. The company also had litigation costs related to ongoing patent lawsuits with several companies, including Microsoft and Verizon Communications.

Despite the shaky economy, Rogers is confident of TiVo's prospects, saying that consumers tend to spend more on in-home entertainment when the economy is poor.

TiVo shares rose 68 cents, or 8.4 percent, to $8.72 in after-hours trading, after finishing regular trading down 13 cents at $8.12.

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