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TiVo adds subscribers, pares loss

The digital recording company cuts its loss for the first quarter nearly in half, compared with a year ago, as revenue and subscriber numbers grow sharply.

Digital recording company TiVo cut its loss for the first quarter nearly in half compared with a year ago, as revenue and subscribers grew sharply.

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The company recorded a loss of $35.1 million, or 74 cents per share. Excluding some charges related to America Online's June 2000 investment in TiVo, it recorded a loss of $25.8 million, or 55 cents per share. In the year-ago quarter, the company posted a loss of $50.2 million, or $1.20 per share.

Analysts were expecting the company to report a 66 cent per-share loss, according to First Call.

Revenue for the quarter was $9.9 million, up from $3.2 million in the year-ago quarter, and well above the $7.95 million analysts were expecting. The company added about 42,000 new subscribers in the quarter, which it attributed in part to the early launch of its Series2 Digital Video recorder.

TiVo has been tweaking its business in order to boost revenue. The company is testing new promotional methods in an effort to please TV networks and customers.

Looking ahead, TiVo said it expects to add between 40,000 and 45,000 new subscribers during the second quarter, and to see revenue between $10.5 million and $12 million, roughly in line with what Wall Street was expecting. The operating loss should be between $15 million and $20 million.

Based on the better-than-expected first-quarter results, TiVo now expects its loss before interest, taxes, depreciation and amortization for the rest of the year to be between $5 million and $20 million.

Beyond increasing its subscriber base, TiVo was able to boost revenue by raising its monthly service fee and pulling in additional fees for licensing and professional services.

TiVo executives said on a conference call Friday that they expect those fees to grow. A deal with Sony, which in May launched its own branded digital video recorder in the Japanese market, should bring in $10 million in deferred revenue later this year.

Advertising could also become a new source of revenue for the company. Earlier this month, TiVo and retail partner Best Buy launched a program that added an electronic tag to commercials that appear to TiVo subscribers. When people click on the tag during the ad, they are taken to a "video showcase" area for Best Buy.

TiVo CEO Mike Ramsey said the company expects to launch other ad-based products later this year, and is working on programs with RealNetworks and Sony. But it's too early for these programs to start contributing to the bottom line, he said.

"We've not included any of that in our revenue guidance this year. The work we've been doing--it's been covering our costs, but it's really experimental for us," Ramsey said. "What we're trying to do is set ourselves up and test new ideas around ad promotions, so when the volume is there, when the critical mass is there, we can monetize that."

AOL and TiVo revised their agreement in May, with TiVo returning $48 million of AOL's original $200 million investment in the device maker. AOL, a division of media giant AOL Time Warner, will return 1.6 million shares of TiVo stock to the company, but it will keep 1.1 million shares of preferred TiVo stock and convert the shares into common stock on Sept. 13.

Separately, TiVo said it would hold its annual shareholder meeting Aug. 2.