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TiVo Narrows Loss on Subscriber Growth

TV recording service credits marketing by DirecTV. Third-quarter revenue climbs 73%.

November 21, 2003|Jon Healey | Times Staff Writer

TiVo Inc. on Thursday said strong growth in subscribers for its television recording service helped the company boost revenue 73% and narrow its fiscal third-quarter loss.

Alviso, Calif.-based TiVo lost $7.4 million, or 11 cents a share, in the three months ended Oct. 31, down from $11.5 million, or 23 cents, a year earlier.

Revenue rose to $43.3 million from $25 million last year. More than half the increase -- $9.9 million -- came from subscriptions and technology licenses, which rose 78% over last year.

TiVo is a pioneering developer of digital video recorders, which store TV programs on hard drives instead of videotape. In addition to making it easier to record programs, the digital approach enables viewers to pause, rewind and replay programs as they are broadcast.

Launched late in 1999, TiVo attracted subscribers and revenue more slowly than many analysts initially expected. Its latest quarter yielded the largest increase in subscribers, 209,000, bringing its total to more than 1 million.

Three-fourths of new users were recruited by Hughes Electronics Corp.'s DirecTV, the leading satellite TV service in the U.S. TiVo executives said the growth stemmed from aggressive marketing by DirecTV, whose subscribers generate less revenue but higher profit margins for TiVo.

News Corp. is buying a controlling stake in Hughes from parent General Motors Corp., prompting some analysts to speculate that TiVo would be dropped from DirecTV in favor of News Corp.'s in-house technology. But TiVo Chief Executive Michael Ramsey said he was confident that TiVo's relationship with DirecTV would remain intact.

"Our four-plus years of working with DirecTV ... creates a very, very solid base from which we can move forward," Ramsey said.

TiVo's subscription and technology revenue was higher than analysts expected, but a major factor was a rise in licensing fees. With that figure likely to slump from $6.7 million to a more typical $2 million in the company's fourth quarter, executives said, subscription and technology revenue is likely to drop slightly even as subscriptions grow by a projected 325,000 to 375,000.

Before TiVo announced its earnings, its shares rose 49 cents to $9.38 on Nasdaq. They fell as low as $8.46 during after-hours trading.

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