TIVO reports continued losses at an excellerated rate

TheForce

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TIVO just reported qtrly losses of $.28 a share for the qtr, up from .18 last qtr. This is 3 times the losses per qtr as the same period last year.

TIVO's product line generates a negative 28% profit or a loss but still has a balance of revenue of $282M with No debt. Therefore, it is relatively safe from becoming backrupt for the next 15 months. Legal fees and operating costs are covered by cash reserves and the equipment has a profit margin of 50% so inventory is covered within the cost of goods sold.

Annual sales is $232M with loss to revenue of $60M.
 
I read today that TIVO management is planning to go ahead and accelerate their budget for R&D which will only accelerate the reduction of capital. It has been my experience when a company does this move, they are getting ready to have a secondary public offering to finance the effort. In today's market, this would probably be a good move because investors are eager to find PO's to put all the sidelined cash into. Not so two years ago. This is a good move for the company, a bad move for existing investors. TIVO has a great reputation for innovation so this is their main asset to sell to the investors. They could never sell an SPO with the claim they need the money to keep from going bankrupt. So, R&D is a smart move for TIVO.
 
Do you really think an investor who examines the company would invest significant money in it? Who would put out a BUY recommendation on TiVo?

And sorry, I think their innovation days ended years ago. And that major investors will see it that way too.
 
I own a premiere. TIVO has been behind the curve on updates and features throughout the deployment.
Examples:
Brain dead Netflix interface that requires placing items in queue from PC. Only items in queue can be accessed for download
no 5.1 on netflix (or any downloaded content)
Amazon streaming on demand released on every VoD platform EXCEPT Premiere
Menus are slow and crash, especially HD menus.
Locks up occasionally and won't respond to remote.
Hulu support promised "soon" for 9 months now.
No support of 2 way cable, so no video on demand from cable provider.
Weak OTA tuner.

And this doesn't begin to touch the billing and customer support issues. Only reason I stick here is that they are head and shoulders above the TWC boxes and service.

However, I will probably jump when IP delivery of cable content becomes reality.
 
Do you really think an investor who examines the company would invest significant money in it? Who would put out a BUY recommendation on TiVo?

And sorry, I think their innovation days ended years ago. And that major investors will see it that way too.

Agreed! But I have bought TIVO in the last 2 years as a trader, not an investor. It has good beta for that purpose. Longest hold time I've been in has been about a month maximum. I rode the move once from $7 to $16 which was my best return. It continued to go to $18 before falling back down to $10. Hasn't had a move like that since. But, $7.50 to $10.50 ain't bad. :) You just have to watch it daily to not get burned.
 
Tivo is looking for more money-


TiVo Unveils Terms Of Boosted Debt Offering With 4% Coupon
8:04a ET March 9, 2011 (Dow Jones)
TiVo Unveils Terms Of Boosted Debt Offering With 4% Coupon
DOW JONES NEWSWIRES

TiVo Inc. (TIVO) boosted the size of its planned debt offering to $150 million and said it will carry a 4% coupon as the company seeks proceeds to fund intellectual property litigation and research and development, among other purposes.
The company had outlined plans Tuesday to offer $120 million in five-year, convertible senior notes.
TiVo has filed a slew of patent-infringement suits over its digital-video-recorder technology. It is in the midst of a years-long legal battle with Dish Network Corp. (DISH) and EchoStar Corp. (SATS) and has accused AT&T Inc. (T) of the same patent oversteps that it claims Verizon communications Inc. (VZ) made. Meanwhile, Motorola Mobility Holdings Inc. (MMI) last month filed a suit against TiVo, claiming infringement of its patents for DVRs.
Shares closed Tuesday at $8.75 and were inactive premarket.
TiVo Inc. (NASDAQ: TIVO) announced today the pricing of its private offering of $150 million aggregate principal amount of 4.00% Convertible Senior Notes due 2016 to be sold to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended. The size of the offering has been increased from the previously announced $120 million aggregate principal amount. TiVo has granted the initial purchaser a 30-day option to purchase up to an additional $22.5 million aggregate principal amount of notes to cover over-allotments, if any. The offering is expected to close on March 10, 2011, subject to certain closing conditions.

The notes will be TiVo's unsecured senior obligations and will pay interest semi-annually at a rate of 4.00% per year. The holders of the notes will have the ability to require TiVo to repurchase the notes in whole or in part for cash in the event of a fundamental change. In such case, the repurchase price would generally be 100% of the principal amount of the notes plus any accrued and unpaid interest.

The notes will be convertible at any time, at the option of the holders, into shares of TiVo's common stock at an initial conversion rate of 89.6359 shares per $1,000 principal amount of notes. At the initial conversion rate, the initial conversion price will be approximately $11.16 per share, representing a conversion premium of approximately 27.5% based on the closing sale price of $8.75 per share of TiVo's common stock on the Nasdaq Global Market on March 8, 2011. In addition, following certain corporate transactions that occur prior to the maturity date, TiVo will, in certain circumstances, increase the conversion rate for a holder that elects to convert its notes in connection with such a corporate transaction.

TiVo intends to use the net proceeds from the sale of the notes to fund intellectual property litigation and research and development spending and for general corporate purposes, which may include funding sales and marketing expenses, increasing working capital, making capital expenditures and potentially for strategic acquisitions.

This announcement is neither an offer to sell nor a solicitation to buy any of these securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

The notes and any common stock issuable upon conversion of the notes have not been registered under the Securities Act of 1933, as amended, or under any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, the use of proceeds from the offering of the notes. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, "believe," "expect," "may," "will," "intend," "estimate," "continue," or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. Factors that may cause actual results to differ materially include delays in development, competitive service offerings, lack of market acceptance and adverse litigation outcomes, as well as the other potential factors described under "Risk Factors" in TiVo's public reports filed with the Securities and Exchange Commission, including TiVo's Annual Report on Form 10-K for the fiscal year ended January 31, 2010, Quarterly Reports on Form 10-Q for periods ended April 30, 2010, July 31, 2010, and October 31, 2010, and Current Reports on Form 8-K. TiVo cautions you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. TiVo disclaims any obligation to update these forward-looking statements.

SOURCE: TiVo
 
If they do not win this suit they do not seem to have a plan B.
Should DISH Network and Echostar prevail, substantially devaluing TiVo's IP portfolio, there really isn't much left to plan for outside of a graceful departure.

Losing to Charlie would almost certainly negatively impact TiVo's other disputes (AT&T, Verizon, Motorola, Microsoft) in terms of momentum if nothing else.

The only secret remaining would be how TiVo remained "debt free" while losing money for so many years.
 
I think it may have more to do with creative bookkeeping than a steady flow of mystery cash.
What type of creative bookkeeping are you suggesting and on what basis do you make that? I think the scheme is more legal but plays on the stupidity of the TIVO trader. With Sarbanes Oxley, few company execs will try cooking the books these days.

More from the analyst's perspective:
TiVo Increases Debt Issue - Analyst Blog
5:49p ET March 10, 2011 (Zacks.com)

TiVo Inc. (TIVO) increased the debt issuance in the form of Convertible Senior Notes from $120.0 million, as announced earlier, to $150.0 million with a semi-annual interest rate of 4.0% per year. The Senior Notes, expected to mature in 2016, will be available in a private placement to qualified institutional investors as per Rule 144A under the Securities Act of 1933.

For its initial buyers, TiVo has approved a 30-day option to purchase up to an additional $22.5 million, up from $18.0 million as announced earlier, of aggregate principal amount of notes to cover over allotment. The offering will close on March 10, 2011.

The issued notes will be convertible into the company’s common stock at the option of the buyers at an initial conversion rate of 89.6359 shares per $1,000 principal amount of notes. As per the initial conversion rate, the conversion price comes in at $11.16.

The stock closed at $8.75 per share when the bourses closed on March 8,2011 and it represented approximately 27.5% conversion premium to its conversion price.

TiVo is entangled in various legal battles against large companies such as Echostar Corp. (SATS), Dish Network Corp. (DISH), Microsoft Corp. (MSFT), AT&T (T), Verizon Communications Inc. (VZ) and most recently, Motorola Mobility Holdings Inc. (MMI).

TiVo is also fighting a lawsuit against Microsoft at the International Trade Commission (ITC), a quasi-judicial forum in Washington, D.C., where companies can ask for a ban on imports of competitors’ products if those products are found violating patent laws.

Funding of intellectual property litigations seems to one of the primary reasons for raising the cash.

In the fourth quarter of 2011, TiVo’s legal expenses were 46.0% of its total operating expenses. TiVo expects its legal expenses to double year over year going forward and for the forthcoming quarter, the company expects the expenses to increase $7.6 million sequentially.

TiVo’s growth also depends on its ability to launch new products on a regular basis, as the company faces stiff competition in the Digital Video Recorder (DVR) market from cable and satellite providers such as Comcast Corp. (CMCSA), DirecTV (DTV) and Dish Network Corp.

TiVo stated that a portion of the funds raised would also be utilized for its R&D activities as well as general corporate purposes. For fiscal 2012, TiVo anticipates that its expenses pertaining to research and development will increase in the range of $25.0 million to $30.0 million from $81.6 million spent in fiscal 2011.

We believe that the debt issuance might pose a significant headwind for the company going forward given its lackluster results and depleting cash reserves.

We have a Neutral recommendation on TiVo over the long term driven by new partnerships with leading companies, new customer wins, product launches and international expansion. However, increasing legal complexities, higher operating expenses, lower subscriber additions and additional debt remain primary headwinds for growth, in our view.

Currently, TiVo has a Zacks #4 Rank, which translates into a Sell rating in the short term.



Navychop:
Yes, I'd like to hear more on that. Who's been pouring capital into them?
As reported on 8K for fiscal year ending Jan31, (****)
Proceeds from issuance of common stock related to exercise of common stock options $30,470,000 (2011) $37,958,000 (2010)
Proceeds from issuance of common stock related to employee stock purchase plan $4,060,000 $4,116,000

I reported this last spring that insiders with stock options were purchasing the stock at low per share price and selling a month later at near double. Then the stock falls due to FUD from the huge institutional sell off and then the insiders may buy it back for a cool tidy legal profit. It's all there in the SEC insider trading reports. The company gets the influx of cash, the insiders get the profits and the public gets hosed but it is their own fault. IS this really legal? I don't know but the transaction is under the nose of the SEC so if they bless this, then it must be. Or, as Jim Cramer often accuses the SEC- they aren't doing their job.

Unfortunately, this stock issuance, plus the cash from Dish as a result of the court order, is not enough to sustain the high expense level of TIVO. Therefore they must raise a substantial volume of cash to cover the legal cost of their business model. Thus the issuance of the convertible notes at only 4% interest. The real incentive to get in on this deal: If the stock does go up the conversion would be a good thing but what will make the stock go up? A new product? Unlikely. A win at the race track of the court system? that is more likely to happen given the track record. I'm sorry to have to admit the logic of that here. How much cash in a Cayman bank would it take to get a Judge to issue a favorable ruling for TIVO, just long enough to get the stock to make a move? Then these investors convert the notes, sell the stock and TIVO stock crashes again. This is a scheme of the Bernie Madoff caliber.

Do the owners care about the company's product? I don't think so. They have a real racket going here with the ability to issue stock to their insiders and set up a rumor that triggers the stock up, they sell, and it falls back down. Anyone who believes TIVO is a DVR these days is a fool. TIVO is a complex stock manipulation scheme. I would not be surprised if we see TIVO on American Greed in a few years.
 
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If TiVo had not entered the legal battles they would be profitable. Now as mentioned above 46% of their expenses are legal bills. This is before MS and Moto suits hit high gear. Even the Dish lawsuit payments are a poor ROI when you consider the risks they took.

They sell their boxes at what seems about cost, but they then get $10 or so bucks a month for essentially guide service which probably costs them 50 cents to a $1 to realistically provide. Not to mention other sources of revenue with ads and DVR data selling.

Even at their current sub levels they could be making a tidy profit and working with companies like Dish/ATT/VZ/DIRECTV to improve their profits instead they got greedy...
 
If TiVo had not entered the legal battles they would be profitable.
I don't think the financial data supports that contention. I think if you look back, TiVo never made a profit until after they threw down with Echostar. Such is not to say that they made money because of the litigation, just that it hasn't really turned the tide as you suggest.

TiVo is losing money because they are losing customers at a steady pace.
 
Who knows what would have happened in a "what if" hindsight. One thing is certain if you look at the numbers. Two groups made huge sums of money at TIVO- The Lawyers and the few insiders who manipulated the stock in a way that made them huge amounts of cash. Who lost? The stock holders who got caught in a buy high sell low corner. Glad I wasn't one of them. Can't really say Dish lost because they did infringe and what they paid was compensation for the IP they used so harshness you are correct, for that quarter when Dish sent the check they turned a profit. The way I see it, Dish paid their punishment for using TIVO technology in that particular case. But it hasn't ( as you said) turned the tide for TIVO as the next quarter they still lost money.
 
If TiVo had not entered the legal battles they would be profitable....

TiVo has NEVER reported profits from operations.

I don't think the financial data supports that contention. I think if you look back, TiVo never made a profit until after they threw down with Echostar. Such is not to say that they made money because of the litigation, just that it hasn't really turned the tide as you suggest.

TiVo is losing money because they are losing customers at a steady pace.

Losing customers, and - the business model never supported profitability from operations.
 

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