TiVo: Tales of Loss and Litigation

|
Includes: CSCO, GOOG, SATS, T, TIVO, VZ
by: The Deal Economy

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