Tuesday, television service provider TiVo Inc. (TIVO) reported a slip to loss in the third quarter from a year ago, hurt by lower revenues due to a decrease in the company owned subscription gross additions for the quarter, as well as a one time catch-up reduction in service revenues associated with a subscription over-reporting error. Earnings for the quarter, however, came in line with the Street estimates, while revenue came in ahead of expectations. Looking ahead, the company provided its forecast for the fourth quarter.
The Alviso, California-based company reported net a net loss for the third quarter of $6.67 million or $0.06 per share, compared to net income of $100.63 million or $0.98 per share in the year-ago quarter.
On average, nine analysts polled by Thomson Reuters expected the company to report a loss of $0.06 per share for the quarter. Analysts estimates typically exclude special items.
The net income for the year-ago period included a $87.8 million in EchoStar litigation proceeds, $16.8 million in interest income and $3.1 million in tax expense. Excluding the EchoStar litigation related items, TiVo would have posted a net loss of $0.9 million for the comparable period last year.
Net revenues for the quarter decreased to $56.86 million from $64.45 million in the prior-year quarter. Six analysts had a revenue consensus of $49.68 million for the third quarter.
The company attributed the lower revenue and net income due to a one time catch-up reduction in service revenues associated with a subscription over-reporting error for the past 18 months by DIRECTV. In accordance with TiVo's accounting policies, TiVo recorded a one-time reduction of $1.8 million in MSO Service Revenues for the quarter.
In the immediately preceding second quarter, TiVo reported a loss compared to a profit in the prior year, hurt by lower revenues due to a decrease in the company owned subscription gross additions for the quarter. Net loss for the second quarter was $2.94 million or $0.03 per share, compared to net income of $2.92 million or $0.03 per share in the year-ago quarter. Net revenues for the quarter decreased to $57.38 million from $65.24 million in the prior-year quarter.
Among TiVo's rivals, subscription television service provider Dish Network Corp. (DISH) reported a 12.3% decline in its third-quarter profit, hurt by lower revenues and higher expenses. Third-quarter net income was $81 million or $0.18 per share, compared with $92 million or $0.20 per share last year. Total revenue was $2.892 billion, down from $2.937 billion in the previous year.
Another player, the Philadelphia, Pennsylvania-based cable services provider Comcast Corp. (CMCSA, CMCSK) reported a 22% increase in profit for the third quarter, helped by an increase in revenues and lower capital spending during the quarter. Comcast net income for the third quarter increased to $944 million or $0.33 per share, from $771 million or $0.26 per share in the year-ago quarter. Revenues for the quarter increased 3% to $8.80 billion from $8.55 billion in the prior-year quarter.
For the third quarter, TiVo's service revenues declined to $37.70 million from $47.68 million in the same quarter. Technology revenues increased to $9.35 million from $4.0 million in the prior period. Hardware revenues for the quarter dropped to $9.81 million from $12.78 million in the year-ago quarter.
Total cost of revenues increased to $30.38 million from $29.84 million in the third quarter of fiscal 2008. Total operating expenses were $33.47 million, compared to operating benefits of $52.03 million in the similar quarter of last year.
TiVo-owned subscription gross additions for the third quarter were around 34,000, compared to 44,000 gross additions for the year-ago period. The TiVo-owned monthly churn rate was 1.7%. Overall, TiVo-owned subscriptions ended the quarter at 1.5 million. Cumulative total subscriptions as of October 31, 2009 were about 2.7 million.
During the quarter, the company successfully defended its intellectual property rights, as the United States District Court, Eastern District of Texas ruled to impose damages and contempt sanctions of about $200 million against EchoStar for its continued violation of a permanent injunction, taking the total damages awarded to date to around $400 million.
For the nine-month period, the company's net loss was $13.74 million or $0.13 per share, compared to net income of $107.16 million or $1.04 per share in the same period last year.
Net revenues for the nine-month period declined to $169.13 million or $190.49 million in the similar period of 2008.
Looking ahead for the fourth quarter, the company anticipates service and technology revenues in the range of $43 million - $45 million with a net loss in the range of $13 million - $15 million.
Analysts currently anticipate the company to report a loss of $0.08 per share on revenue of $46.19 million for the quarter.
TiVo also expects that higher research & development and litigation expenses will impact its fourth quarter 2010 results.
TIVO closed Tuesday's regular trading at $10.97, up $0.24 or 2.24%, on a volume of 3.37 million shares. Further, the stock gained $0.03 or 0.27%, trading at $10.99 in after hours.
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