August 26, 2010 / 12:47 AM / 9 years ago

TiVo beats expectations on DVR sales

NEW YORK (Reuters) - TiVo Inc (TIVO.O), the digital video recorder maker, reported a narrower loss than expected on Wednesday thanks to a pick-up in sales for its new Premiere recorder, but forecast a wider-than-expected net loss in the fiscal third quarter.

TiVo shares were slightly lower in after-hours trading.

The company said it expects a net loss in the range of $19 million to $21 million for its fiscal third quarter citing higher research and development costs, and legal fees from lawsuits, including its ongoing battle with EchoStar (SATS.O) and Dish Network (DISH.O).

Wall Street had expected a loss of around $13 million.

The company posted a fiscal second-quarter net loss of $15.3 million, 13 cents a share, compared with a loss of $2.7 million, or three cents a share in the year ago period.

The average analyst’s estimate was for a loss of 15 cents a share, according to Thomson Reuters I/B/E/S.

TiVo had expected a net loss of $17 million to $19 million.

Revenue fell 10.4 percent to $51.6 million but beat analysts’ expectations of $41.87 million.

“I think it was a good solid quarter but the company is still in transition,” said Kaufman Bros analyst Todd Mitchell.

Chief Executive Tom Rogers told Reuters that it is the first quarter in three years that sales of TiVo DVRs through retailers have increased year to year.

The company launched its Premiere DVR in March.

Mitchell said the Premiere, with a $300 price tag for the base model, is attracting customers fed up with the low-performing DVRs provided by some cable companies.

“In this economy and at that price point—more expensive than the DVRs that you can get for a few bucks a month from your cable provider—speaks to the strength of that piece of hardware...,” Mitchell said.

Alviso, California-based TiVo pioneered digital TV recording software but has posted six straight quarters of losses as cable companies have crowded its market with cheaper recording boxes.

Mitchell said new arrangements with distributors will be key to TiVo’s performance.

During the quarter, TiVo signed deals with cable providers Cox Communications and RCN to distribute the new recorders.

Rogers said he expects TiVo to win the ongoing legal battle with satellite TV provider EchoStar.

In June, the U.S. patent office rejected two of TiVo’s patent claims in a legal fight with Dish Network and EchoStar. The legal battle dates back to 2004, when TiVo charged that satellite TV provider EchoStar’s Dish Network system violated TiVo’s patent for “Time Warp” software, which allows users to record one TV program while watching another.

Shares of TiVo traded at $8.38 after hours down from the close on Nasdaq of $8.47 on Nasdaq. The stock is down about 20 percent this year.

Reporting by Liana B. Baker; Editing by Richard Chang and Carol Bishopric

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