UPDATE, 3:40 PM: The strategy to lower the retail price of TiVo DVRs made sense when the company’s revenues primarily came from its own subscribers’ monthly service payments. But CEO Tom Rogers says he’s giving “quite a bit” of thought to the possibility of ending his company’s subsidies of its retail DVRs. Virtually all of TiVo’s new customers come via cable and satellite companies. Comcast, DirecTV and others are beginning to offer TiVo’s interface as a premium feature on their own DVRs. That’s why the prospect of requiring consumers to pay the full price for a TiVo DVR is “something we always continue to look at,” Rogers told analysts in a conference call. He isn’t ready to exit the retail DVR business just yet, though. It “gives us the consumer electronics chops as a cutting edge player,” the CEO says, and “distinguishes us from most other vendors.” DirecTV is preparing to launch a national marketing campaign for a TiVo-equipped set top box that has just begun to offer its customers. Meanwhile, Comcast is testing a different arrangement in the San Francisco area: The cable company markets and installs a TiVo DVR that consumers can buy at retail stores. Unlike most TiVos, the one Comcast serves includes all of its Xfinity Internet content, as well as outside services such as Netflix and Hulu. It’s “as robust an offering as is available anywhere,” Rogers says. The cable company plans a commercial roll out in the Bay area that’s “weeks, not months, away.” Rogers says that other pay TV companies have expressed interest in the arrangement. He’s also building bridges with pay TV providers by offering non-DVR set top boxes. He also plans to offer TiVo boxes that would serve the entire home, with a central storage unit transmitting video to devices connected to other TV sets. That could be ready by mid-year, Rogers says.
PREVIOUS, 1:18 PM: Everyone knew that the quarter that ended in January would be unusual for TiVo, following the settlement in January of its patent infringement suit against AT&T. That deal guaranteed TiVo at least $215M over time. And the $54.4M contribution in Q4 led to impressive results for the struggling DVR pioneer. TiVo reported net income of $7.2M, up from a $34.4M loss in the period last year, on revenues of $66.5M, up 19.1%.The revenue figure is well ahead of the $50.9M that analysts expected. And the profit, at 6 cents a share, fast-forwarded past the Street’s forecast of a 21 cent loss. So why are TiVo’s shares down slightly in after hours trading? It may be due to the company’s forecast that it expects to lose as much as $20M in the current quarter. Some analysts also expected the company to end Q4 with more subscribers: TiVo had 2.28M, up 234,000 in the quarter. All of the gains came from cable and satellite companies that offer TiVo service on their own DVRs. For the first time since 2009 fewer than half of total subscribers buy the service directly from TiVo. The company collects about $1.42 a month for each of the customers it gets via cable or satellite and $8.05 for each subscriber it lands on its own. Still, the general consensus is that the company is regaining its financial footing now that it has shown in cases involving Dish Network and AT&T that it controls the key patents behind DVR service. TiVo is still in court challenging Verizon for offering its customers DVRs that allegedly infringe on TiVo patents. Its shares are up 33.9% so far in 2012. CEO Tom Rogers says that TiVo “is on the right path to sustained growth in fiscal 2012.”
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