Zacks Analyst Blog Highlights: TiVo, Charter Communications, AT&T, Dish Network and Motorola Mobility Holdings

Mar 03, 2011, 09:53 ET from Zacks Investment Research, Inc.

CHICAGO, March 3, 2011 /PRNewswire/ -- Analyst Blog features: TiVo Inc. (Nasdaq: TIVO), Charter Communications (Nasdaq: CHTR), AT&T Inc. (NYSE: T), Dish Network Corp. (Nasdaq: DISH) and Motorola Mobility Holdings Inc. (NYSE: MMI).


Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter:

Here are highlights from Wednesday's Analyst Blog:

TiVo Misses, Guides Lower

A developer of advanced television services including digital video recorders (DVR), TiVo Inc. (Nasdaq: TIVO) reported a loss of 30 cents per share in the fourth quarter of 2011, worse than the Zacks Consensus Estimate of a loss of 28 cents.

TiVo provided disappointing first quarter guidance and expects higher net losses on a sequential basis. Shares plunged 1.22% to $9.70 in the after-hours trading.

Operating performance

TiVo reported fourth quarter 2011 net loss of $34.0 million compared with a net loss of $10.0 million in the prior-year quarter. However, this was in line with the high end of management's guided range of $32.0 to $34.0 million.

Gross profit decreased 39.5% year over year to $15.4 million. Gross margin declined to 27.5% from 37.0% in the year-ago quarter, primarily due to the sluggish revenue growth in the quarter.

Operating expenses escalated 35.8% year over year to $50.0 million, leading to a higher net loss in the quarter. TiVo reported an operating loss of $34.6 million compared with $11.4 million in the prior-year quarter.

Adjusted EBITDA of a negative $25.8 million was well below $3.0 million reported in the prior-year quarter but was in line with management's guided range of a negative $24.0 million to $26.0 million.


Revenue decreased 18.7% year over year to $55.8 million in the fourth quarter. However, revenue was marginally above the Zacks Consensus Estimate of $54.0 million. The weak year-over-year results were primarily due to 10.2% decline in Service and 38.5% decline in Hardware revenue in the quarter. Technology revenues remained flat in the quarter.

TiVo-owned subscription gross additions for the quarter were 60,000 compared with 46,000 gross additions in the year-ago quarter. Churn rate decreased to 3.0% in the quarter. Subscription acquisition costs increased 41.9% year over year in the quarter.

Balance Sheet and Cash Flow

At the end of the fourth quarter, cash, cash equivalents and short-term investments were $209.4 million versus $227.5 million at the end of third quarter 2011. The company had no debt at the quarter end.

Cash flow from operations was a negative $19.9 million in the quarter compared with a negative $14.4 million in the previous quarter.

Full-Year 2011 Results

For the year 2011, net loss was $84.5 million compared with a loss of just $23.0 million in 2010. The company reported a loss of 74 cents per share in 2011, worse than Zacks Consensus Estimate of a loss of 72 cents.

Revenue decreased 8.0% year over year to $219.6 million. Service and Technology revenue decreased 13.7% and 8.7%, respectively on a year-over-year basis. Hardware increased 5.7% year over year in fiscal 2011.

Gross profit decreased 17.8% year over year to $91.2 million. Gross margin was 41.5% compared with 46.5% in the previous year.

Operating expenses increased 29.8% year over year to $176.8 million. Operating loss was $85.6 million compared with a loss of $25.2 million in the earlier year.

Adjusted EBITDA was negative $51.3 million in the year compared with a positive EBITDA of $9.4 million in the preceding year.

TiVo-owned subscription gross additions for the year were 160,000 compared with 148,000 gross additions a year ago. Churn rate decreased to 2.2% in the quarter. Subscription acquisition costs increased 17.4% year over year.


The company provided disappointing guidance for the first quarter of fiscal 2012. The guidance reflects increased litigation expense, higher R&D costs due to increased product development and distribution efforts. The expenses are expected to increase by roughly $7.6 million sequentially in the first quarter.

TiVo expects Service and Technology revenues to range between $36.0 million to $38.0 million. Management expects a higher net loss in the range of $35.0 million to $37.0 million in the first quarter. Adjusted EBITDA is expected to be between ($25.0) million and ($27.0) million in the first quarter of 2012.

For fiscal 2012, TiVo expects R&D spending to increase in the band of $25.0 million to $30.0 million. Legal expenses are expected to increase more than double on a year-over-year basis ($23.0 million in fiscal 2010).

Our Take

During the fourth quarter 2011, TiVo announced a multi-year agreement with Charter Communications (Nasdaq: CHTR), the fourth-largest cable operator in the United States to deliver IP-enabled video platform. We continue to believe that new partnerships with leading companies in addition to new customer wins, product launches and international expansion will drive top-line growth.

TiVo remains entangled in various patent lawsuits, which involves major companies such as AT&T Inc. (NYSE: T), Dish Network Corp. (Nasdaq: DISH) and most recently Motorola Mobility Holdings Inc. (NYSE: MMI). Going forward, any negative outcome from these various lawsuits will have a negative impact on the shares, in our view.

Moreover, increasing legal expenses (46.0% of total operating expenses in 2011) and increasing competition from cable and satellite providers will hurt profitability going forward.

We have a Neutral rating on TiVo over the long term (6-12 months). Currently, TiVo has a Zacks #4 Rank, which implies a Sell rating over the short-term (1-3 months).

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter:

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today:

About Zacks is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at

Visit for information about the performance numbers displayed in this press release.

Follow us on Twitter:

Join us on Facebook:

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.


Mark Vickery

Web Content Editor



SOURCE Zacks Investment Research, Inc.