TiVo, Inc. (NASDAQ:TIVO)

Steve Cohen ane peg of 0.18. Billionaire Steven Cohen's SAC Cdpital Advisors is one of the most prestigious hedge funds around. The fund has returned nearly 30 percent annually since its founding. SAC Capital disclosed a sizable 6.46 million share stake in TiVo (NASDAQ: TIVO). This represents an increase of about 4 million shares since June 30.

Negative PE.

This was a great idea and great technology when it originally came out, but many of the cable, TV & satellite companies offer similar services. So they have to cut costs, which means the growth & innovation will slow down, yielding lower revenues and potentially more losses. It's a vicious cycle and will be difficult to escape unless they can come up with another great idea or technology. Or they get bought out.

Small investors; Stay away & Look elsewhere....Anyone who picks TIVO to outperform even the tech sector (much less the S&P 500) is not viewing this company from the right mindset. This out-dated brand needs new breakthrough technology in order to survive in their competitive industry (where the Cable & Satellite companies are looking for more cost effective DVR's). There are much more attractive technology options to invest in right now (ones that have new, innovative ideas). As far as tech stocks go, right now, I'd buy a single share of Google before buying 75 shares of TIVO.

People no longer "TIVO it".....They "DVR it"

TIVO was once the pinnacle of DVR technology and the word "TIVO" was used as a verb (just "Tivo" it). However, those days are long gone. The word "TIVO" isn't relevant anymore.

TIVO is now being replaced with the most popular word, "DVR" as well as other new fancy titles such as; "The Hopper"

Here's several reasons to short TIVO and/or dump the dying company from your portfolio (in favor of newer and better technology brand);

Instant Video:
First of all, more and more people are using instant online video (Hulu, Netflix, Amazon Instant Video, VuDu) as well as cable/satellite on-demand services nowadays.

Also, people are switching the satellite services over "TIVO-friendly" cable services.

DirecTV launched a new TIVO receiver for loyal TIVO fans. However, nobody is going to want the new TIVO box for DirectTV, and here's why;

The new DirecTV TIVO receiver doesn't work with the new DirecTV "Whole Home" technology (which is what allows viewers to pause and watch a recording from another room).

The new DirectTV Media Center DVR is a much better option (over the the new TIVO); as it records more programs at once, has a bigger hard drive, and works with "Whole Home" service (along with other things).

TIVO is also losing the customer loyalty. This means less people using the word "TIVO" and more people using the word "DVR". Old DirecTV ready TIVO boxes are now relics due to the limited abilities. Customers who once paid $600 for a DirecTV High-Definition Tivo box now have a $600 paper weight (because doesn't get DirecTV's new HD channels)

Dish Network:
DishNetwork has other programming costs to worry about (dropping Rainbow Media channels; such as AMC to cut costs) in order to keep their subscription plans competitive with DirecTV.

Cable:
Cable companies want to cut expenses to get more cost effective DVR's as well.

Despite what people think, TVO doesn't even lead the DVR manufacturing industry. There are much better (and more cost effective) DVR manufacturers out there for Cable and Sat. services to use).

Unless they fail to manufacture some new breakthrough technology, this company will die a lonesome death; and eventually a satellite/cable company will buy them just to say they are the exclusive TIVO carrier (making TIVO even more irrelevant).

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Tivo is now a commodity and doesn't add anything to the market. They were first, now they are just a metoo.

As a lessor, I have used DVRs from two different cable companies and from two different satellite companies. They all failed to perform in one or more ways. I have been aware for ten+ years of TiVo's: 1. solid performance, 2. superior programming, 3. current ability to record/stream from multiple sources and 4. easy-to-use interface. I have remained untroubled and optimistic about the future and have held my shares in spite of the rabble, including both technical and market experts, many of whom I doubt have ever owned a TiVo. With the introduction of the new MONSTER (record 4 channels while watching a fifth) TiVo device, they continue to innovate and, in my humble professional opinion, will succeed in the current known market.

TiVo must gain many thousands of customers to make up for the lower revenue per customer under its licensing deals. The quarter's results show the problem in detail: TiVo lost 43,000 retail customers producing nearly $100 in revenue annually, while it gained 10,000 "non-owned" customers who each provide about $25. That's about $4 million going out the door, and $250,000 coming in.

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There are so many other options now.

Recent legal victories will make others likely to settle and provide Tivo with licensing revenue. Also, tivo will now be able to focus on the product. Pending Direct TV tivo will boost subscriber numbers.

Low Sales and Return on Equity

Comcast just ended its agreement with TIVO.

The TV space is changing fast, so far Tivo has managed to keep up and still has an excellent product. I expect them to continue to mature their services to keep up w/the market.

needing a favorable court outcome and still liking their product

On-line on-demand content, available to anyone at any time for streaming or downloading, will make the TiVo box a quaint antique - you'll find them at flea markets, stacked next to the 8-track players.

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.

this is a 1-2 year play as the dish litigation finally resolves itself. AT&T and other DVR providers wil have to payup if the TIVO patents hold in the DISH lawsuit.

Everybody has TiVo.

TIVO has dipped below $10 and has stayed there following the Court of Appeals for the DC Circuit's decision (in May) to vacate its previous decision affirming a district court's ruling in favor of TIVO regarding DISH/EchoStar's contempt of the infringement order issued a while back in favor of TiVo. (Whew!) They will now have an en banc (full panel instead of just 3 judges) hearing on November 9, 2010. A decision will follow (maybe by year's end) that will either find DISH in contempt or order a new trial.

One of 4 things can happen here. (1) TiVo prevails and TIVO stock goes up faster than you can skip past the commercial break; (2) DISH/EchoStar prevails and TIVO stock takes another huge hit; (3) The parties could settle prior to a final decision by the Court of Appeals and any favorable settlement would likely result in an increase in TIVO stock, albiet not as large as a court victory; or (4) DISH buys out TiVo and ends the 6 year-long fiasco (possible, but unlikely in my opinion).

As a disclaimer, I am an attorney by trade. I have thorougly reviewed the litigation in front of the Court of Appeals and I believe TiVio has an extremely good chance of coming out on top in this appeal.

Without getting into too much boring legal jibber-jabber, suffice it to say that DISH was found to have violated TiVo's patent a while back. Then during the appeal of that court decision, DISH tweaked its programming and said "Voila!" our DVR is "different" and no longer infringes on TiVo's patent! Well, after the original appeal was affirmed, DISH didn't stop using its "tweaked" DVR and TiVo cried FOUL! And, for good reasons.

TiVo sought contempt against DISH for disobeying the Court's order to stop using it's patented technology. The district court sided with TiVo. DISH appealed, and Court of Appeals affirmed. DISH cried, "One last time, PLEASE!!!" The Court said, "Ok, fine, stop your whining! One last time, I suppose..." Now the whole Appeals panel will hear the case again in November.

The legal issues are a little more complex than I've outlined, but I have reviewed the details of the case thoroughly. There is not enough space here to go into too much depth. Although nothing is certain about any lawsuit, TiVo has a favorable standard of review of the district court's decision and the benefit of the Court's prior ruling in its favor. As an attorney, I have also considered the somewhat complicated arguments of both sides, and I believe TiVo will be successful. However, this is just one man's opinion.

Therefore, I suggest you fools do some "legal due diligence" here if you can. Take a look at TiVo because I see a stock that is poised to pop. It is a speculative play and I have not looked into TiVo's long term prospects enough to give any long recommendation. But, I believe the downside risk of a TiVo loss in the courtroom to be much, much lower than the upside potential. Short term BUY.