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TiVo turns on revenue, subscriber growth

The digital video recorder company offers upbeat guidance for its upcoming fiscal year and reaffirms its estimates for the current quarter and fiscal year.

Digital video recorder company TiVo on Tuesday offered upbeat guidance for its next fiscal year and affirmed previous estimates for its second quarter and current fiscal year.

The company expects revenue for fiscal 2003 of $63 million to $72 million and an operating loss of $96 million to $108 million. TiVo expects to add another 300,000 subscribers next fiscal year, bringing the total to 650,000. Fiscal 2003 starts in February 2002.

The company also reiterated its second-quarter revenue of $3.5 million to $4 million with subscriber growth of 30,000 to 35,000. Its second quarter ends in July.

For the current fiscal year, the company reaffirmed its previous revenue guidance of $20 million to $24 million with 180,000 to 220,000 new subscribers for a total of 350,000. TiVo predicts an operating loss for the current fiscal year of $145 million to $155 million.

In expectation of the announcements, TiVo's shares closed up $1.81, or 36 percent, to $6.88 Tuesday. In after-hours trading, the stock dipped to $6.80, according to Island ECN.

On a conference call Tuesday, TiVo executives said they expect that revenue from the licensing of a patent issued in May for digital video recording technology will become a significant source of non-subscriber revenue. But they would not elaborate on any pending licensing agreements.

The company expects non-subscriber revenue to account for up to 40 percent of fiscal 2003 revenue, which would be a significant increase over the current fiscal year. Technology licensing will make up most of the non-subscriber revenue, David Courtney, TiVo's chief financial officer, said during the call.

Advertising on TiVo's service will also contribute to non-subscriber revenue, he added.

Company executives have not announced any licensees of TiVo's patent. However, some industry observers believe that the underlying purpose of the conference call was for TiVo to confirm that revenue from licensing will be real.

"Many in the industry were skeptical that licensing revenue was for real, but the naysayers are hiding their faces in their hands," said David Miller, an analyst at Sutro & Co.

In related news, the price of a competing set-top box from RCA will drop to $299, a discount of $100, Wednesday. The RCA box, which records up to 35 hours of programming on a hard drive, uses Microsoft's UltimateTV service.

Comparable set-top boxes with TiVo cost $249 to $299 after a $100 rebate.