Parsing TiVo's Latest Conference Call

Includes: CMCSA, TIVO
by: Dave Zatz

TiVo (NASDAQ:TIVO) held its quarterly call Wednesday and, while I don’t pretend to be a financial analyst, I’ll share my uninformed observations.

As TiVo sometimes does, the Investor Relations group began their earnings day by releasing a bit of fluff news to the press - I don’t know if this is designed to distract the market to soften the blow, juice the stock price, or what. Regardless, I didn’t bite.

The quarterly results seem generally positive… TiVo was guided to just their third profitable quarter (!), though this is largely due to a continued reduction in marketing expenditures - perhaps accounting for the net loss in subscribers. While the majority of these folks retired from the obsolete DirecTiVo platform, stand-alone TiVo unit subscriptions were also in decline. (Fully amortized Lifetimed units also push the subscriber number down, but they didn’t volunteer exactly how many that is.) However, TiVo has no debt, plenty of cash on hand, and I get the sense they feel like they’ll be coming into even more related to EchoStar’s patent infringement. Going forward, TiVo expects to pick up additional customers via newer channels consisting of the MSO dealios (Comcast (NASDAQ:CMCSA), Cox) and their Australian offering.

Related to the tech itself, I didn’t come across many interesting nuggets. It’s expected that Cox will begin offering their custom TiVo solution this fall in New England. Related, Comcast is expected to increase both their marketing and market presence beyond New England beginning next month. Specific regions weren’t disclosed, but I heard something somewhere a long while ago that Denver was to be one of the initial sites. We shall see.

In regards to a Series4 Tru2way TiVo unit, it doesn’t look we’ll be seeing anything soon. Surely not in 2008. According to CEO Tom Rogers:

The retail Tru2way issue, we have agreed with the cable industry that we would look to provide a OCAP or Tru2way retail device. It is something that we would like to do, meaning something that a consumer could go into any retailer and purchase and plug it into any cable system anywhere in the country and it would just work. There are a number of CEs that are focused on Tru2way devices. Our view is that that whole regime is going to take more time to be clarified and to get the ability for players such as ourselves to build on a national uniform homogeneous basis. We are not alone among the consumer electronics players seeing that that is going to be a slower process than the cable industry may have liked, and certainly issues that we see along the way we bring to CableLabs’ attention, although there isn’t any one at this point that I would necessarily say conflicts with our objectives.

I can’t say I’m surprised with TiVo’s conservative approach given recent industry reports. I’m not even sure this needs to be a priority. However, an interim solution of a TiVo HD with integrated SDV tuning adapter would go a long way towards maximizing TiVo compatibility within the shifting cable landscape. In other cable marketplace news, TiVo doesn’t seem overly concerned with Cablevision’s network DVR. According to Rogers, “a lot of legal issues that still need to be resolved on that front” and there’s an “inadequate capacity at this point for broad scale deployment of a network DVR solution.”