TiVo Shares Tumble as Company Lowers Set-Top Prices

Aug 9, 2004  •  Post A Comment

Shares on digital video recorder maker TiVo tumbled more than 10 percent Monday as the company unveiled plans to drop the prices of its set-top boxes.

The Alviso, Calif.-based company on Monday said it was going to offer 40-hour set-top boxes for $99, after a $100 rebate, starting on Wednesday. The company was also reducing the prices of the other set-top boxes it makes, with the 80-hour box selling for $199 and a 140-hour box selling for $299.

The company said it would begin selling set-top boxes through retailers Sam’s Club, CompUSA, Target.com, Fry’s Electronics and Costco. TiVo already has distribution deals with Amazon.com, Best Buy, Circuit City, Dell.com and Good Guys.

The effort is part of a broader plan to boost the number of TiVo subscribers to 3 million by January 2005. The company announced earlier this year it would set aside $50 million to jump-start subscriptions. A company executive said the rebates will help the company move toward profitability by the next fiscal year.

Investors aren’t convinced. News of the sales strategy was greeted coolly by Wall Street, which sent TiVo shares down 48 cents to close at $4.30 a share. Analysts see TiVo’s price reduction move as a last-ditch effort to snag customers before cable and satellite operators begin to fully roll out their own version of the DVR, which is generally a cheaper alternative to TiVo’s service, which in addition to the cost of the box includes a $12.95 monthly subscription fee.