TiVo quarterly loss widens on write-down of inventory
Digital video recorder maker TiVo Inc. on Wednesday posted a loss that reflected an inventory write-off made necessary by the rapid shift by retailers to sell newer, high-definition recorders.
TiVo shares fell more than 4% after hours.
Its net loss for its fiscal second quarter ended July 31 was $17.7 million, or 18 cents a share, compared with the year-earlier quarter’s loss of $6.4 million, or 7 cents. The latest quarter’s loss included an inventory write-down charge of $11.2 million.
Excluding the write-down on components used in older recorders, Wall Street had been looking for a second-quarter loss of 5 cents a share, according to Reuters Estimates.
Chief Executive Tom Rogers said TiVo was writing off components used in its standard-definition recorders and refocusing its retail strategy on its recently introduced high-definition TV recorders. Alviso, Calif.-based TiVo introduced its first cost-competitive high-definition recorder this month.
“This is kind of a turning-the-page quarter,” Rogers said.
Second-quarter revenue rose 6% to $62.7 million.
Analysts on average had expected revenue of $58 million for the second quarter, according to Reuters Estimates.
The fiscal first quarter of 2007 was the first time the decade-old company had not reported a quarterly loss since it went public in 1999. It had posted a profit of $835,000, or 1 cent a share, for the first quarter ended in April.
Stepped-up marketing costs and the shift in its retail focus to meet demand for high-definition recorders mean that revenue for the third quarter is likely to fall below Wall Street analysts’ expectations, the company said.
For the fiscal third quarter ending in October, TiVo said it expected revenue of $56 million to $57 million and a net loss of $14 million to $17 million.
It also expects to pay $3 million in one-time stock compensation costs to cover the transition and consulting agreement of founder and former CEO Mike Ramsay, who recently left the company’s board of directors.
Analysts had forecast third-quarter revenue of $58.4 million, with predictions ranging from $56.3 million to $60.1 million, and a loss of 7 cents a share, according to Reuters Estimates.
New TiVo hardware is sold at a loss through retailers, but the company makes up for it through customers’ monthly subscriptions fees.
TiVo has been working for several years to offer recorders as a service through Comcast Corp. and other cable network operators.
TiVo said that it expected to begin seeing a growing number of subscribers in Comcast’s core New England market beginning in September and that Comcast had agreed to fund development of a TiVo recorder to work on Scientific Atlanta set-top boxes, which are used by Comcast’s customers.
Comcast had previously funded work by TiVo on development of a TV recorder that works with its other main cable converter set-top box, made by Motorola Inc.
TiVo can build on this development to make TiVo boxes that work with the two primary set-tops in the market -- Motorola and Cisco Systems Inc. unit Scientific Atlanta -- and develop similar services for cable operators besides Comcast.
Although the retail market has shifted to focus on high-definition, Rogers said, he still sees a large market for standard-definition recorders among the 30 million U.S. cable subscribers who do not yet use digital cable services.
The announcement by TiVo was made after the close of the stock markets. Shares of TiVo rose 18 cents to $6.20 during Wednesday’s regular session.
