The Incredible Shrinking Tivo (TIVO)

Posted: May 31, 2007 at 5:58 am

Tivo (TIVO) ended the quarter with fewer subscribers than it had a year ago–4.34 million compared with 4.42 million.

The company gave a number of reasons why this was a good thing. DirecTV (DTV) is deploying its own digital video recorders instead of using the Tivo product. But, revenue growth was slow, only about 6%, so the explanation does not seem to make things feel better. Tivo did $60.4 million in the quarter and had net of less than $1 million.

Tivo management forecast that revenue in the next quarter would actually move down to about $58 million and that the company would lose money. The firm is trying to replace its DirecTV business with partnerships wedding it to Earthlink and Comcast (CMCSA). But, no big deployments are in the offing.

No matter what happens to the company, Tivo will be remembered as an innovator. It was the first widely availabe service that let people watch TV shows at a time other than when they were broadcast.

But, Wall St. cannot help but get the felling that a $250 million breakeven business with questionable growth prospects has much of a future.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

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