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TiVo sells stock to fill the till

The digital video recorder company signs agreements to sell $25 million in stock. It might just reach profitability by year's end.

TiVo plans to raise $25 million in a stock sale with the goal of reaching profitability by the end of the year.

The San Jose, Calif.-based company announced Monday that Crosslink Capital and New Enterprise Associates will buy $25 million worth of the company's stock.

TiVo, which offers digital video recording services to record and replay shows at will, plans to sell 6.96 million shares at $3.59 per share--a 3 percent premium over the stock's average closing price for the last 10 days. TiVo will also issue warrants for the purchase of 2.6 million shares of common stock at $5 per share.

Cash remains a key issue for the company, according to Matthew McCormack, a financial analyst with Freidman Billings Ramsey.

"Liquidity has remained a concern from the early days, when the company spent hundreds of millions of dollars on branding and subsidizing manufacturers' costs," McCormack wrote in a research note Tuesday. "We now expect TiVo to end the year (and reach profitability) with $40 million in cash."

Over the last few quarters, the company has been focusing on lowering operating expenses while expanding the number of technology and services licenses.

Analysts have said that the restructuring of its deal with DirecTV and a licensing deal with Sony have improved the company's outlook.

The company said in a release that it will use the sell-off proceeds for general corporate purposes and to supplement working capital.