Executive Overview and Outlook of Financial Results
Fiscal year 2010
In the fiscal year ended January 31, 2010 we focused our efforts on building leading advanced television products, engaging in distribution agreements and deployment activities, and protecting our intellectual property. In our efforts to accomplish these strategies, TiVo recorded a net loss of $(23.9) million. As of January 31, 2010, we increased our cash, cash equivalents, and short-term investments to approximately $245 million and continued to have no debt as we continued to efficiently manage our spending.
During the fiscal year ended January 31, 2010, our service revenues decreased by 15% or $28.6 million over the prior fiscal year due to a net decrease of 189,000 TiVo-Owned subscriptions primarily as a result of increased competition for digital video recording services. Furthermore, we continued to experience a decline in our MSOs/Broadcaster installed subscription base as many of our current distribution agreement are still either in the development stage or very early stages of deployment. As a result, our total cumulative subscription base decreased from the prior year.
Fiscal year 2011
In the fiscal year ending January 31, 2011 we continue to be focused on our efforts to build leading advanced television products, entering into new distribution agreements, engaging in development work for existing distribution agreements, and commencing and continuing deployment activities for those distribution agreements. Additionally, we will continue to actively protect our intellectual property. In our efforts to accomplish these strategies, we expect to continue to have a net loss for the fiscal year ending January 31, 2011 as we focus on the following priorities:
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While the latest successful appeals court ruling in our ongoing litigation with Dish (EchoStar) moves us closer to collecting additional damages from them, we have not yet received any cash awards beyond the $104.6 million received in the fiscal year ended January 31, 2009. In fiscal year ending January 31, 2011, we will continue our efforts to protect our technological innovations and intellectual property. As a result, we expect our litigation expenses for our ongoing patent infringement lawsuits, which include our ongoing litigation with Dish (EchoStar) as well as recently commenced lawsuits involving AT&T, Verizon and Microsoft, to increase significantly from our most recent fiscal year ended January 31, 2010.
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During the first quarter of fiscal year ending January 31, 2011, we launched our next generation TiVo Premiere and TiVo Premiere XL boxes which go beyond the traditional DVR functionality by merging linear television and broadband delivered content together. The cost to produce these new boxes is lower than our previous HD DVR offering and we expect this to improve not only our cost of hardware but also positively benefit subscription acquisition costs. However, we still anticipate near-term increases in our sales and marketing, subscription acquisition costs as we begin marketing these new products in an effort to ensure that consumers understand the unique qualities and benefits provided by the TiVo service and our next generation TiVo Premiere boxes.
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We believe that investments in research and development are critical to remaining competitive and being a leader in advanced television solutions that go beyond the DVR. Therefore, we plan to increase our research and development spending from the prior year to engage in these new technological and product developments.