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TiVo shares drop on disappointing 1Q results, view

LOS ANGELES (AP) -- Shares of digital video recorder pioneer TiVo Inc. fell Thursday after its first-quarter loss and guidance for the current period were worse than analysts expected.

THE SPARK: TiVo's loss in the February-April quarter came to 15 cents per share, 2 cents worse than analysts predicted. Revenue topped expectations, but its forecast for a second-quarter net loss of $28 million to $30 million was worse than the $16 million predicted by analysts polled by FactSet.

TiVo had 2.5 million subscribers in the February-April quarter, a rise of 524,000, or 27 percent, from a year ago. About 235,000 new subscribers came from pay TV signal providers who have contracted with TiVo to be the provider of their set-top boxes.

THE BIG PICTURE: TiVo DVRs appeal directly to consumers who want their set-top box to be independent of their pay TV signal provider. The company also markets its DVRs through cable and satellite TV companies.

The company is involved in lawsuits over what it claims is proprietary technology. In January, TiVo announced that AT&T Inc. will pay it at least $215 million through June 2018 in a legal settlement over its technology. It still has a pending suit against Verizon Communications Inc. on grounds similar to previous cases it settled.

THE ANALYSIS: Evercore analyst Alan Gould says the growth in the number of subscribers obtained through pay TV signal providers was below his estimate of a gain of 337,000. Gould called this segment of customer the key driver for TiVo's stock price.

He lowered his target price on TiVo to $13 from $13.50.

Janney analyst Tony Wible said that increased expenses for litigation "cloud the path" back to profitability for Tivo, although in the long term, legal victories help it make money from its technology. He lowered his price target on the shares to $13 from $18.50.

SHARE ACTION: TiVo shares fell 39 cents, or 4.4 percent, to $8.57 in afternoon trading Thursday. Shares are down from a 52-week peak of $12.37 hit in March.