TiVo financial reports are rarely uplifting and its second-quarter report is no exception. The company took an inventory write-down and purchase commitment charge of $11.2 million that it said it hadn’t anticipated.
Wonder if that’s all the pricey HD TiVo’s it announced last year and couldn’t sell – writing them off and all the parts it had ordered and commitments it had made to third parties to manufacture more of them.
Its second-quarter loss increased to $17.7 million, 18 cents a share, compared with a loss of $6.5 million, or seven cents a share, in the prior year. That does not include the $11.2 million write down. Revenue for the three months ended July 31 rose to $62.7 million from $59.3 million. TiVo expects to break even on an adjusted earnings basis, before interest, depreciation and amortization, for fiscal 2008.
The company picked up 136,000 subscribers in the quarter but the gross additions for TiVo-owned subscriptions (as opposed to those that DirectTV sold) came to 41,000, compared with 74,000 a year ago.
TiVo said the number of new subscribers was negatively impacted by the slow pace at which retailers moved to sell high-definition DVRs. That seems to confirm that perhaps even the less-expensive TiVo HD DVR the company recently launched may not be doing as well as TiVo had hoped.
Its problem is that most consumers are getting their DVR from their pay-TV service, which is discounting them in order to compete with other pay-TV services. TiVo expects to post a net loss of $14 million to $17 million in the current quarter, its third.
The only good news came out of the courts. The US Court of Appeals for the Federal Circuit ruled in August that oral arguments in EchoStar’s appeal of a patent infringement ruling in favor of TiVo could begin October 4. TiVo claims that EchoStar violated its “time warp patent,” which enables the TiVo DVR to record one program while playing back another. If TiVo were to win out in the Appeals court and a possible Supreme Court appeal, every DVR maker could owe TiVo some big time bucks. The jury in the trial awarded TiVo $73 million in damages. The court ordered EchoStar to disable more than three million DVRs that infringed upon TiVo’s patents, but that order has been delayed pending EchoStar’s appeal.
This coverage first appeared in The Online Reporter from Rider Research, email peter@rethinkresearch for contact details.