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TiVo Reports Wider Q2 Loss

Aug 26, 2004  •  Post A Comment

Digital video recorder maker TiVo posted a wider fiscal second-quarter loss Thursday as the company spent more to acquire subscribers and assured Wall Street that it is prepared to do battle in an increasingly competitive environment.

The San Jose, Calif.-based company booked a quarterly loss of $10.8 million, or 13 cents a share, for the three months ended July 31, compared with year-earlier red ink of $4.4 million, or 7 cents a share. Revenue surged 49 percent to $39.8 million, driven in large part by a 77 percent rise in service revenue to $24.3 million.

The wider loss was largely the result of a sharp bounce in subscribers during the quarter. TiVo added 288,000 total subscriptions during the quarter, triple the number added in the year-ago quarter. TiVo now has 1.9 million subscribers.

Much of that growth came from its partnership with DirecTV Group, under which TiVo supplies the satellite operator with DVR technology for its set-top boxes. DirecTV accounted for 225,000 new subscriptions in the quarter.

TiVo-owned subscriber growth was 63,000 in the quarter, 3 percent off the company’s stated goal but 85 percent higher than the number of TiVo-owned subscribers added in the year-ago quarter.

Meanwhile, Mike Ramsey, TiVo’s chairman and CEO, said TiVo is well positioned to compete against the cable companies DVR offerings, and he expressed confidence about the state of the company’s partnership with DirecTV. Some market observers have suggested TiVo’s future could be in doubt as News Corp.-controlled DirecTV begins to use DVR technology from another News Corp. company, NDS Group PLC.

Mr. Ramsey said he thinks the company’s incumbent status with DirecTV ensures that TiVo and DirecTV continue to work together beyond the February 2007 expiration date of the current agreement.

What’s more, Mr. Ramsey said, TiVo has opportunities to grow beyond its relationship with DirecTV by offering DVRs to analog cable customers, most of whom are required to get digital cable in order to use the cable companies’ DVR services.