TiVo shares slide as DVR technology maker posts another quarter of losses amid competition

Thursday, August 26, 2010

TiVo shares slide after another quarter of losses

NEW YORK — Jittery investors sent shares of TiVo Inc. lower Thursday, even though the DVR maker’s second-quarter results beat expectations.

THE SPARK: While TiVo topped Wall Street forecasts, the company has endured a string of quarterly losses as rising competition has hurt subscriber growth and it contends with an expensive patent fight against Dish Network Corp.

Its loss in the most recent quarter grew substantially from the same period a year ago. For the three months that ended July 31, TiVo lost $51.6 million, compared with a loss of $2.7 million in the second quarter of 2009. TiVo is forecasting a loss of $19 million to $21 million for the third quarter.

The company lost 125,000 subscribers during the quarter to end it with about 2.4 million total subscribers, down from roughly 3.1 million a year ago. Its monthly churn or cancellation rate worsened to 1.9 percent from 1.5 percent.

THE BIG PICTURE: After pioneering the DVR market, TiVo now faces competition from cable boxes that can also record and save TV programming. It also remains embroiled in a six-year patent dispute with satellite TV company Dish.

THE ANALYSIS: Still, analysts gave mainly positive reviews for the company’s latest results.

In a client note, BMO Capital Markets analyst Edward Williams said TiVo’s stock has been “hijacked” by extended litigation over the patent dispute. But he said the company should be able to start growing its subscriber base again through recent strategic partnerships.

TiVo has been trying to expand distribution of its set-top boxes through cable providers such as RCN Corp., Cox Communications and Suddenlink Communications. It has struck similar deals with Virgin Media in the U.K. and the Spanish cable company Ono.

SHARE ACTION: The company’s stock slid 27 cents, or 3.1 percent, to $8.20 on Thursday afternoon.

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