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TiVo doubles revenue, beats estimates

The digital video recorder company posts a narrower-than-expected loss and reports that revenue for its fiscal fourth quarter doubled over the same period a year ago.

TiVo posted a narrower-than-expected loss Thursday and reported that revenue for its fiscal fourth quarter doubled over the same period a year ago.

TiVo's digital video recorder (DVR) service allows consumers to record and pause live television shows onto a hard drive.

TiVo reported a net loss of $38.5 million, or 85 cents per share, on revenue of $6.8 million for its fiscal fourth quarter, which ended Jan. 31. In the same quarter a year ago, the company reported a loss of $81.5 million, or $2 per share, on revenue of $2.2 million.

The consensus figure for analysts' estimates was a net loss of 92 cents per share, according to First Call.

The San Jose, Calif.-based company also reported 2002 year-end results. For the company's fiscal year 2002, it reported a net loss of $157.7 million, or $3.67 per share, on revenue of $19.4 million, including special charges.

The company beat analyst expectations for its fiscal year. Analysts were expecting a net loss of $3.73 for the year, according to First Call.

Last year, TiVo reported a net loss of $216.6 million, or $5.75 per share, on revenue of $4.6 million.

"We believe we are on track to achieve our goal of reaching cash-flow breakeven by the end of this fiscal year, a significant objective for us," TiVo Chief Executive Mike Ramsay said in a statement.

The company also reported that it added about 100,000 subscriptions to its service in the fourth quarter, for a total of more than 400,000.

Analysts had expected high subscription rates, on the order of up to 100,000, for the quarter, citing strong holiday sales of DVRs in retail stores.

Consumers have the option of signing up for a lifetime or monthly subscription to TiVo's DVR service. Executive vice president David Courtney said that lifetime subscribers made up just over half of all subscribers last year, but over the last half of the year the company saw an uptick in monthly subscriptions.

Looking ahead
TiVo also gave an outlook for the current year. The company predicts revenue to more than double to $50 million to $60 million for the year and expects to be cash-flow breakeven sometime this year.

TiVo expects subscriptions to grow by 70 percent, or 250,000 to 300,000 new subscribers, for a total of 650,000 by Jan. 31, 2003, the end of the company's fiscal year 2003.

On Wednesday, TiVo announced that beginning April 1 it would raise the cost of a monthly subscription to its DVR service from $9.95 to $12.95. For previous monthly subscribers, TiVo said it would lower the price of a lifetime subscription from $249 to $199 until April 1.

TiVo's cash-burn rate slowed in the fourth quarter. The company used $23.8 million for the quarter compared with $65 million for the same quarter a year ago. It had cash, cash equivalents and short-term investments of $52.3 million after fiscal 2002, compared with $124.5 million after fiscal 2001.

The company expects to use $20 million to $35 million in cash this year and has enough cash to get the company to cash-flow breakeven, Ramsay said.

Courtney added that the company has received funds from Sony for a licensing deal that the two companies struck late last year, but they were not included in TiVo's fourth-quarter results.

Though TiVo gets most of its revenue from subscriptions, the company is working to make its technology licensing a bigger contributor to its bottom line.

"This year we anticipate licensing to contribute about 20 to 30 percent to revenues," Ramsay said in a conference call with financial analysts.

Late last year, TiVo created a new business unit to concentrate on licensing deals.

The company is also working to drive customer acquisition costs down and cut subsidy costs on hardware, this year.

TiVo subsidizes each recorder that it sells so that the cost of the recorder is lower for consumers. This has proven to be a drain on the company's cash, but with the forthcoming Series2 recorders, which will cost less to manufacture than current recorders, the company is looking to bring an end to those subsidies.

"With the Series2, we're out of the subsidy business," Ramsay said.

TiVo on Tuesday announced an exclusive agreement to sell its Series2 second-generation recorder through Best Buy retail stores. The DVR, which the company announced earlier this year, is due in May. The Series2 DVR will cost $399 and allow up to 60 hours of recording time.

TiVo shares closed at $6.76, up about 12 percent, or 76 cents. In after-hours trading, TiVo was down to $6.60, about 2 percent, or 16 cents.