TiVo: Tales of Loss and Litigation

TiVo Inc. (NASDAQ:TIVO) has had a shaky foundation for much of its life. While it revolutionized the entertainment industry with its digital video recorder that first hit the markets in the late 1990s, it has not been as fortunate as other tech trailblazers, often leaving industry observers to wonder if its story will end in bankruptcy.

The problem for TiVo is the harsh reality that almost all satellite and cable companies now offer their own similar, and less expensive, generic DVR service. For example Time Warner Cable Inc. (NYSE:TWC) utilizes devices from Cisco System Inc.'s (NYSE:CSCO) Scientific Atlanta, and Verizon Communications Inc.'s (NYSE:VZ) FiOS TV service uses Motorola Inc. (NYSE:MOT) boxes.

So, it may come as no surprise that TiVo reported Wednesday a net loss of $2.92 million, or 3 cents per share, and says the next quarter won't be much brighter.

A potential hope for the company is continued patent litigation. The Alviso, Calif., company filed a patent lawsuit against AT&T Inc. (NYSE:T) and Verizon for violating three patents that involve multimedia time warping system, time shifting multimedia content streams and an automatic playbook overshoot correction system.

The company already has had some success with a similar suit against EchoStar Corp. (NASDAQ:SATS):

On the intellectual property front, we scored a significant victory this quarter when EchoStar was found to be in contempt in the United States District Court, Eastern District of Texas. EchoStar is currently appealing the contempt order. The Court of Appeals stayed the injunction while it considers the appeal. We expect that there will be a hearing on this matter in the November timeframe. Additionally, along with the contempt order TiVo was also awarded $103 million in damages covering the original appeal stay period.

But fighting a satellite TV provider is different than challenging the massive Ma Bell and her offspring -- two companies that know a great deal about legal proceedings. - Gerald Magpily

Comments

[tivonomo:]

"The problem for TiVo is the harsh reality that almost all satellite and cable companies now offer their own similar, and less expensive, generic DVR service. "

Cost of the TiVo DVR is hardly the problem. Actually the costs are very comparable. The problem is that providers of TV service bundle services and can give 'free" DVR's up front as promotions. Additionally, TiVo boxes are only compatible with cable providers. Satellite and IPTV providers aren't required to allow TiVo to compete.

Aug 27 03:50 PM

[Ckramer:]

Actually, this article also reflects one of the problems for TIVO -- the fact that the other companies have somehow convinced the media and public alike that the other DVR's out there are "similar." I am a longtime DirecTV user, with a series 2 TIVO box (that can even burn DVD's); When I added my next two televisions, however, the TIVO/DirecTV partnership was in its terminated phase, and I was forced to get a Directv brand dvr for the new sets if I wanted to use DirecTV and a dvr. The DirecTV dvrs are simply nowhere near similar, and are wholly inferior, same goes for the Moxy and other generic machines. The bulk of the people I speak with refer to their generic dvr's as "TIVO" and have no idea that the features and functions are vastly inferior. When they find out what the true TIVO really can do, they are amazed.. Why TIVO has been unable to get the word out, so that people know that the "cheaper" DVR's are NOT THE SAME as TIVO, is the question that perplexes. Its as if they don't realize the damage the false perception is causing their sales..

Aug 27 06:51 PM

[This is all...:]

Tivo's advantage is the ability to watch movies on demand from Amazon, Netflix and Jamman and lower your cable bill by 50%. Get rid of the 100 movie channels and save on monthly bills. In a recession economy some viewers will see this as a superior option.

Aug 28 08:27 AM