CAPS Rating: 1 out of 5

The Company is a provider of technology and services for digital video recorders.


Player Avatar DukeGuy (< 20) Submitted: 11/19/2010 5:40:08 PM : Underperform Start Price: $9.04 TIVO Score: +23.08

They've only turned a profit once. This poor performance isn't the result of Direct TV's infringment, and Tivo winning the case isn't the magic path to profitability. The realy problem with Tivo is... wait for it... TIVO! Tivo is and always has lost money producing Tivo Boxes! And it's only going to get worse with new subscriptions costing $20.00 a month (and the entrance of superior entertainment substitutes like Netflix).Pop Quiz: When a company loses money on selling a product and relies on subscriber retention as its model it shoud: A: make the box more expensive, make it way better than DVR, and carry a small (2-8 dollar) subscription premium; thus making the consumer vested and likely not to switch for a couple years.OR B: Make the box cheaper (causing even heavier reliance on low subscriber turnover), and then make the subscription 3-4 times more expensive than viable supplements.99.999% of Fools would choose option A as superior. However, TIVO has chosen option B.They have a strategy that MUST have low turnover... but then they've lowered the acquisition cost AND raised subscription premiums; both of which encourage turnover!!!If Tivo figures this out and stops making the darn box they can be really profitable as a tech licensing business. They may even have enough leverage post-litigation to retain brand power by forcing other DVR providers to put "Tivo" on their box. Right now they're just a below-average company with an average product and a bad strategy. This may be a $20 stock someday, but it'll be a $5 stock long before that day comes.

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