From The Wall Street Journal:
NEW YORK (Dow Jones)--TiVo Inc. (TIVO) posted the most profitable quarter in the company's history in the fiscal first quarter thanks to its recent legal settlement with Dish Network Corp. (DISH). With the dispute with Dish behind the company, a new deal with Comcast Corp. (CMCSK, CMCSA) and a continued rollout by other cable companies, TiVo is establishing a clearer path back to profitability and subscriber growth.
But the boost to the bottom line was only a temporary one. The company continues to struggle with the transition from its more mature, and deteriorating, business to its new, more profitabile products.
TiVo expects to return to a loss in the second quarter of $25 million to $27 million on service and technology revenue of $46 million to $48 million. Analysts polled by Thomson Reuters most recently expected a loss of $17.6 million on $42.8 million in total revenue. Service and technology revenues account for the bulk of the total. Analysts' estimates exclude impacts from a recent settlement.
For the fiscal first quarter, TiVo reported a profit of $139 million, or $1.04 a share, compared with a year-earlier loss of $14.2 million, or 13 cents a share.
Revenue fell 25% to $45.8 million as service and technology revenue fell 10% to $38.8 million.
"We have substantially improved our financial picture," Chief Executive Tom Rogers said in an interview.
Earlier this month, Dish and its former unit EchoStar Corp. (SATS) agreed to pay TiVo $500 million to settle a seven-year patent dispute over digital video recorder technology. Rogers said at the time that resolving the dispute would let the company focus on strategies such as building more relationships with media companies. As part of the deal, Dish would continue to pay TiVo a licensing fee.
"Reaching a settlement of this magnitude underscores the fundemental nature of our intellectual property," Rogers said.
He added the company is exploring its options for use of the cash. One of those options include a possible share buyback.
TiVo had posted wider losses in recent quarters amid lower revenue and higher costs. It has also reported lower subscriber counts. In the latest period, it lost a net 88,000 subscribers, fewer than the 96,000 it lost a year earlier. Total subscriptions ended the quarter at 2 million, down 22% from a year earlier.
Rogers said the losses come from the company's older boxes, which TiVo no longer makes, and that its newer products continue to attract customers. In particular, the company is seeing growth in users from its cable customers.
"You have to separate the legacy stuff from the new stuff," he said.
He declined to predict when the company would return to customer growth, but said the trend was moving in the right direction.
Gross margin widened to 46.1% from 43.6%.
Subscriber acquisition costs declined 8.4%. Monthly churn, or the cancellation rate, was 2.3% for TiVo-owned subscribers, compared with 2% from a year earlier.
While TiVo expects lower legal costs down the line, the company still has a pending patent battle with AT&T Inc (T), Verizon Communications Inc. (VZ) and Microsoft Corp. (MSFT). Rogers said TiVo has done a good job of batting away earlier suits designed to scare the company away.
Shares fell 2 cents to $9.39 in recent after-hours trading. Through Tuesday's close, the stock is up 4% the past year.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com
--Matt Jarzemsky contributed to this report
2nd UPDATE: TiVo Swings To 1Q Profit After Dish Settlement - WSJ.com
NEW YORK (Dow Jones)--TiVo Inc. (TIVO) posted the most profitable quarter in the company's history in the fiscal first quarter thanks to its recent legal settlement with Dish Network Corp. (DISH). With the dispute with Dish behind the company, a new deal with Comcast Corp. (CMCSK, CMCSA) and a continued rollout by other cable companies, TiVo is establishing a clearer path back to profitability and subscriber growth.
But the boost to the bottom line was only a temporary one. The company continues to struggle with the transition from its more mature, and deteriorating, business to its new, more profitabile products.
TiVo expects to return to a loss in the second quarter of $25 million to $27 million on service and technology revenue of $46 million to $48 million. Analysts polled by Thomson Reuters most recently expected a loss of $17.6 million on $42.8 million in total revenue. Service and technology revenues account for the bulk of the total. Analysts' estimates exclude impacts from a recent settlement.
For the fiscal first quarter, TiVo reported a profit of $139 million, or $1.04 a share, compared with a year-earlier loss of $14.2 million, or 13 cents a share.
Revenue fell 25% to $45.8 million as service and technology revenue fell 10% to $38.8 million.
"We have substantially improved our financial picture," Chief Executive Tom Rogers said in an interview.
Earlier this month, Dish and its former unit EchoStar Corp. (SATS) agreed to pay TiVo $500 million to settle a seven-year patent dispute over digital video recorder technology. Rogers said at the time that resolving the dispute would let the company focus on strategies such as building more relationships with media companies. As part of the deal, Dish would continue to pay TiVo a licensing fee.
"Reaching a settlement of this magnitude underscores the fundemental nature of our intellectual property," Rogers said.
He added the company is exploring its options for use of the cash. One of those options include a possible share buyback.
TiVo had posted wider losses in recent quarters amid lower revenue and higher costs. It has also reported lower subscriber counts. In the latest period, it lost a net 88,000 subscribers, fewer than the 96,000 it lost a year earlier. Total subscriptions ended the quarter at 2 million, down 22% from a year earlier.
Rogers said the losses come from the company's older boxes, which TiVo no longer makes, and that its newer products continue to attract customers. In particular, the company is seeing growth in users from its cable customers.
"You have to separate the legacy stuff from the new stuff," he said.
He declined to predict when the company would return to customer growth, but said the trend was moving in the right direction.
Gross margin widened to 46.1% from 43.6%.
Subscriber acquisition costs declined 8.4%. Monthly churn, or the cancellation rate, was 2.3% for TiVo-owned subscribers, compared with 2% from a year earlier.
While TiVo expects lower legal costs down the line, the company still has a pending patent battle with AT&T Inc (T), Verizon Communications Inc. (VZ) and Microsoft Corp. (MSFT). Rogers said TiVo has done a good job of batting away earlier suits designed to scare the company away.
Shares fell 2 cents to $9.39 in recent after-hours trading. Through Tuesday's close, the stock is up 4% the past year.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com
--Matt Jarzemsky contributed to this report
2nd UPDATE: TiVo Swings To 1Q Profit After Dish Settlement - WSJ.com
