TiVo, Inc. (TIVO)

Most people do not understand the value of TiVo's patent victory at the trial level against Echostar. That victory has about an 85% chance of being upheld at the appeal court level, and that verdict will most likely be rendered sometime between September 2007 and early 2008. At a minimum, TiVo will get the original damages of $73 million plus interest, which alone would be around $200 million by the end of calendar year 2007.

On top of that, TiVo is seeking that the damage award be trebled (tripled) for willful infringement, which the jury decided in TiVo's favor, and which could force Echostar to pay up to $600 million. That is equivalent to TiVo's ENTIRE CURRENT MARKET CAPITALIZATION, but that only covers PAST infringement. Echostar still would have to pay a monthly fee to TiVo for each of its approximately 4.5 million users, or shut them down (TiVo will also get its injunction against Echostar reinstated if it wins the appeal). Shutting them down is not really an option, nor is swapping them out for a non-infringing solution, simply because there are no non-infringing DVRs out there.

And that brings us to the really exciting part. Many people have said that TiVo can't compete with the likes of Time Warner (note that that's true of patent infringement in general, because the infringer didn't have to pay for development or patent costs). However, with a patent infringement victory in its pocket, TiVo won't have to. Time Warner will either sign a licensing deal with TiVo, or be sued, and with the groundwork that TiVo has already laid, TiVo might be able to secure a preliminary injunction. But it won't come to that, because Time Warner and all the other cable and satellite providers will sign a deal. They'd be stupid not to, because TiVo has the best of breed software (the carrot), and enforceable patents (the very large stick).

If TiVo wins the appeal, it's not a stretch to argue that they will be paid about a dollar a month for every 'knockoff' DVR, and there will be 30-40 million of those in the next 3-4 years. If all they do is break even on the rest of their operations (which they already can do), that is perhaps $480 million per year in high margin (90+%) revenue. Let's say it's $400 million per year in subscription-based (i.e., recurring) profit, growing at about 20% per year. With under 100 million shares, that's roughly $4.00 per share, and assuming a relatively conservative PEG of 1 would give you a share price of $80. You read that right. $80 per share. For a stock currently trading at around $6.

They get ALL of this just by winning the appeal, and there is about an 85% chance of that. I haven't even gone into the value that they can get from providing broadband content (through Amazon Unbox, among others), advertising deals (with some of the leading ad firms), and standalone sales (which could be greatly enhanced by the large cash infusion from Echostar). TiVo has had a rough time over the past several years, but the time to get in is now, before the have the cable and satellite industry by the... well... by the time they have a lot of leverage in negotiations.

Dean/TwoPairFullHouse

The question is not whether DVR technology will become the norm. The question is whether TIVO will able to be THE company to capture profits from this cultural shift. I think it will, although I have been waiting for the stock to settle down from recent surges to make my pick.

I bet the stock price will fall lower, but I'm tired of waiting. With real money, I'd be cautious and buy on dips. It will likely hit $10-11 in the next two years, but it will also hit five sometime before then.

Bottom line, no other company is sitting in a better position to hit the DVR-Revolution paydirt, but TIVO can't do it alone. Hopefully they will acquire (and maintain) the partnerships they need to get it right. If so, $20-30 in the next five years is not unreasonable.

Oh, Tivo, How do I love you...let me count the ways.

No...let me count the ways you'll make money.

Ladies and gentlemen, boy and girls I have yet to find a better sleeper than TIVO. Yes, you know that they are at 85% odds to beat Echostar (DISH) in court and collect a whole lot of money and royalties from others..... but have you considered what AT&T is up to?

AT&T has announced that they will pick a satellite partner later this year or early in 2008. Many think that will be Echostar ( DISH ).

Not me, not today I say...and here is why.

IF T ties her boat to Dish and Dish loses T is Sooooooo screwed. Nothing says that TIVO must license to DISH if Tivo wins. All this while John Malone ( DTV ) is apparently making nice with the guys at TIVO.

I suspect Malone is going to T and saying ...hey..why take the chance with Dish who may have nothing. I Have the BEST of the BEST with TIVO...come join me as I already have 57% of your customer based signed with me anyhoo.

Dish is very screwed. If the lose, and most think they will...they could lose the T contract AND DVR rights...all due to their cheating ways.

For my .02, T shouldn't tie their boat to cheaters in the first place. We all know that cheaters never prosper in the end.

Neither will DISH.

Please vote for this post as that would be nice, my thoughts here are original, and it would send DISH a message about geting their poop straight and being nice.

TiVo has an outstanding product but lacks the built in subscriber base that cable operators have. However, with recent signings of Comcast other cable companies they are now making inroads into the cable compaines. In addition they continue to add additional features like download video from the internet. Cable companies don't have this capability and if TiVo can market themselves properly they will do great.

With Christmas nearing, their High-Def model is selling well and now that they no longer have Lifetime Subscriptions they have a great resource for recurring revenue.

Margins are high on the subscription but low on the hardware. However once they start rolling out to Comcast and others they won't incur a hardware cost because they will be using the cable company hardware. This will increase their margin levels and in turn increase their profit.

The business model is dying. DVR technology is easily replicable, and TIVO's software is not absolutely superior or uncopiable. There isn't much in terms of brand name protection, since people choose their cable based on price and service, not brand like for clothing or cars.

TIVO has to compete against Microsoft, Verizon, and AT&T. These behemoths can crush TIVO by waging a war of attrition. Even though TIVO may have won against Echostar in trial, DirecTV has introduced its own competitor, moving away from TIVO. DirecTV had been a significant MSO for TIVO.

Also, DVR technology is not the wave of the future. The wave of the future is VOD through broadband directly to your TV. Also, new televisions come with hard drives attached or compatibility with external hard drives, meaning no one will pay a monthly fee to use this service.

Finally, simply looking at their income statement and balance sheet shows a very unprofitable/unhealthy company. If their CFO remains constant from last year, they will burn their cash reserve in 2 years. Analyst EPS outlook isn't positive by then. Could simply burn out if it can't find additional financing.

TiVo's still unprofitable, and still very much a risk. But it's got three huge advantages as well. First, its customers LOVE the product -- they're fanatical about it, and every TiVo owner I've met says it's a life-changing experience. Second, TiVo's software is apparently the best in the DVR market, by leaps and bounds. Third and most importantly, TiVo's recent victories in patent lawsuits give it an ever-widening competitive moat. I expect the company will shift from hardware to software, but I also expect it's due for a long-term turnaround.

Success defending intellectual property (e.g. vs. Echostar) will unlock future value for this company. The TiVO brand has become a part of the American vocabulary.

The product is great, but delivering it has been a struggle...current legal issues hamper it's short term, but if it survives, can become a good company with an exceptional product.

They're still losing money for now, but that's because they're getting boxes into as many households as possible. They've recently added online services through Yahoo!, Fandango, and others, as well as parental controls that are effective and easy to use. Consumer electronics companies have been trying for years to build the all-in-one set-top box that will integrate TV, digital recording, Internet services, and video on demand. TiVo is closer to this convergence than anybody else I've seen.

While still in the red, the recent joint ventures with Comcast, Cox, CBS, as well as several ad analysis firms, Tivo will be the defacto PVR SOFTWARE provider within 3 years.

Tivo is yet another pioneer. How often does your average Joe/Jackie refer to their DVR, PVR etc...as their Tivo? Personally, I am VERY confident that they are the soon to be Google of Television with their noose around the future of advertisements. We're looking at the new way to watch tv.

This company is going to get killed by the competition and fade away to obscurity. They had such a head start that they almost had the dvr market named after them, "to Tivo, like to Xerox something", but their product is turning increasingly into a commodity that they can't differentiate in meaningful ways. They do have a loyal customer base, but when these customers realize that all of the cable companies offer the same services for cheaper and you don't even have to buy a Tivo box, Tivo will not only stop getting new customers, but will start to lose existing customers. Tivo needs some serious changes to their current business model if they are going to succeed.

Not doing it for me anymore. Why drive to the store to buy a TiVo when DVR's come with most cable packages?

Great product, great name, new licensing deals recently signed, and it looks like EchoStar - though still fighting - will soon have to pay a good chunck of change to the company. This is another case in which the downside seems pretty small.

Tivo has got to have been one of the best innovations in the entertainment field. I am no longer forced to watch TV when my favorite programs are on, but when I have nothing better to do. Tivo took a beating when DirectTV stopped using them for their DVR service. I think this was a big mistake on DirectTV's part that will come back and bite them in the future. I've heard nothing but complaints about thier replacements (even from DirectTV's CSRs). I even told them flat out, if I can't keep my Tivo, I will leave DirectTV as a customer. Needless to say, I still have my Tivo.

The Comcast and Cox deals are the launch pad for TiVo. Cable companies are very much run by the heard mentality. Once the first (or better yet second) major MSO buy into a technology, the rest fall in line quickly. I believe that TiVo will sign several other MSO deals in the next two years, assuming the Comcast rollout is successful.

TIVO is an amazing product and it only gets better - you can record two shows at a time - you no longer need a home phone line to use it. Tivo has hundreds of patents and is winning lawsuits. Tivo is at a very low price right now. 15.6 million TVs are estimated to have DVRs right now. Projected totals are 50 million in 2010. If Tivo maintains 25% market share, that will be 12.5 million TIVO users each spending $15 a month for service or $187.5 million a month in revenue ($2.25 Billion a year)

Tivo has a great innovative user-friendly product, and management that doesn't know how to make money off of it. The Street knows this and the stock price is already beaten down (though up 20% from where I bought it).

There are two drivers, however, that make Tivo a great speculative play. First of all, Tivo continues to win its patent lawsuit against Comcast - when that finally settles, Tivo will not only win the award, they will be able to license their software to the other generic DVR providers. This would let management do what they do best - innovate in the user experience area while letting the cable and satellite companies do the selling.

The other big driver is the whole convergence of TV/PC. Tivo with its excellent software, user data, committed customer base, intellectual property, and depressed price is an excellent target for so many of the companies that want to win in VOD downloads. The start of that was the Amazon pact, but there are lots of companies looking in the magic mirror and seeing success with a Tivo tie-in. Expect Tivo to continue to appreciate as institutions buy in expectation of a purchaser.

TIVO has a great product. I never was into TV until my wife bought our first TIVO 2 years ago. We now have 3 units in 3 rooms, all wirelessly connected. Everyone I know raves about owning a TIVO, so I can't understand why this company can't get it's act together and start turning a profit. Although I'm a conservatve investor, this stock is one of my spec. plays. I feel it has a niche market and from what I have seen so far, it provides a better product then the cables comps. DVR's (at least our cable company). I feel in the long term, TIVO will come around is one has patience.