(Adds comments from Tivo CEO in third, eighth, 11th and 12th paragraphs and updated stock price.)
By Ben Charny Of DOW JONES NEWSWIRES TiVo Inc. (TIVO) swung to a fiscal third-quarter profit as the company recorded a litigation payment from EchoStar Corp. (SATS).
However, the company warned that it expects the current economic climate to chill sales of consumer electronics this holiday season. "The overall issue for all companies is the economic environment," Tivo Chief Executive Tom Rogers told Dow Jones Newswires. "In the last six weeks of the quarter, you saw a major impact on consumer spending, that's when we saw major trail-off in gross subscriber additions."
For the quarter ended Oct. 31, the digital video-recorder company reported net income of $100.6 million, or 98 cents a share, compared with a year-earlier net loss of $8.27 million, or 8 cents a share. Excluding the litigation gain, the company would have posted a loss of about $900,000 for the latest quarter.
Revenue fell 15% to $64.5 million. Service and technology revenue, which excludes hardware sales, fell 11% to $51.7 million.
In August, TiVo expected a fiscal third-quarter loss of $7 million to $9 million on service and technology revenue of $49 million to $51 million.
Gross margin widened to 53.7% from 40.7%.
TiVo-owned subscription gross additions fell 36% to 44,000. A majority of those losses occurred during the last six weeks of the quarter, when CEO Rogers said there was a "major impact on consumer spending." At the end of the quarter, there were 1.7 million TiVo-owned subscribers and 3.5 million total subscribers.
Subscriber acquisition costs tumbled 54% to $139 per subscriber as TiVo continued to pare back marketing spending. The monthly churn, or cancellation, rate rose to 1.4% from 1.3%.
For the fiscal fourth quarter, TiVo expects a loss of $10 million to $12 million on service and technology revenue of $47 million to $49 million. Analysts were expecting $10.5 million and $55.5 million, respectively. Aside from macro-economic pressures, Roger said he expects TiVo's ongoing quarter to be negatively affected by a "very" expedited hearing schedule for patent litigation TiVo filed against EchoStar, severance and benefits charges related to layoffs TiVo announced last week, and re-stocking vendors with TiVo equipment for the holiday sales season.
"We have the enviable position of having no debt, and $200 million in cash," Rogers told Dow Jones. "Given what world values these days, that seems to be the right financial profile."
The company has been cutting costs, including with workforce reductions, as it works to mitigate weak economic conditions. Last week, TiVo said it expected to record $1 million in pretax severance charges in the fourth quarter.
TiVo, which makes DVRs that allow viewers to record television programs to a hard drive, has fought in the marketplace and the courtroom to keep its competitive advantage in the rapidly changing TV set-top market.
The company's battles with satellite-television providers Dish Network Corp. (DISH) and EchoStar paid dividends when it got $105 million in damages from Dish. Though many observers expect the companies will eventually strike a partnership, their war of words continues over a workaround that Dish has said doesn't violate TiVo's patents.
During the third quarter, TiVo entered a distribution agreement with satellite-TV company DirecTV Group Inc. (DTV), and cable provider Comcast Corp. (CMCSA CMCSK) said it would expand its rollout of TiVo services.
In after-hours trading, TiVo shares were up 3% at $4.60. The shares fell 4.7% to $4.43 during the regular session.
-By Ben Charny, Dow Jones Newswires; 415-765-8230
(Jay Miller contributed to this report.)
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(END) Dow Jones Newswires
November 25, 2008 17:19 ET (22:19 GMT)

Publié le 25 novembre 2008 Copyright © 2008 Dowjones