TiVo losses deepen in fourth quarter

NEW YORK Tue Mar 1, 2011 7:10pm EST

NEW YORK (Reuters) - Digital video recorder maker TiVo Inc (TIVO.O) reported a wider quarterly loss as its expenses rose and it forecast a rise in research and development costs.

For the first quarter of 2012, the company said its net loss would be in the $35 million to $37 million range.

But investors are more concerned with TiVo's legal battle with EchoStar Corp (SATS.O) and DISH Network Corp (DISH.O), which Wall Street analysts expect to be decided in April or May.

A victory for TiVo could add $15 to $25 to the company's shares, or $1.5 billion to $2 billion, said Gabelli & Co analyst, Brett Harriss. TiVo's current market cap is $1.15 billion.

"What really matters to TiVo is the outcome of their litigation with Dish," Harriss said.

Besides its lawsuit with Dish, TiVo, is engaged in several legal fights and it projected its legal costs would "rise significantly" above an earlier level of $7.6 million.

On February 27, Motorola Mobility sued TiVo for infringing its patents.

The company told analysts it would spend $20 million to $30 million on research and development next year, which analysts say is a questionable move considering its negative earnings.

Gabelli & Co's Harriss said TiVo will likely use those funds to develop technology for the cable operators it has agreements with such as Canal Digital in Scandinavia, RCN and Virgin Media.

These agreements will drive TiVo's growth, the company's chief Executive Tom Rogers said.

"Operators are increasingly recognizing that simply providing broadband connection and video channels is not going to be the basis for which consumers see value and that's where we come in," Rogers said in an interview.

TiVo's quarterly loss was $34.4 million, or 30 cents a share, compared with a loss of $9.9 million, or 9 cents a share a year earlier.

The loss of 30 cents a share was below Wall Street estimates of a loss of 28 cents a share, according to Thomson-Reuters I/B/E/S.

For the fourth quarter ended January 31, net revenue fell about 19 percent to $55.8 million.

TiVo shares closed 4.5 percent lower at $9.82 on the Nasdaq on Tuesday.

(Reporting by Liana B. Baker; editing by Andre Grenon)