Briefing.com slams TiVo, "consumer electronics retailer".
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TiVo Inc (TIVO) 48 3/4 +10 5/16: Pop Quiz: What is the sum of 0.04 mln + (-32 mln). If you guessed negative
31.96 mln, you're wrong... Forgot to tell you, we're using Silicon Valley math. In this case, the answer is a
positive $1.8 billion, as in a $1.8 billion market-capitalization for a company which over the past nine months
has lost $32 mln or $6.50 a share, while capturing revenues of just $41,000.... TiVo Inc provides a
subscription-based service enabled by a personal video recorder that allows consumers to pause, rewind,
instant replay and playback in slow motion any live television broadcast. As part of a distribution agreement
with Blockbuster Inc. (BBI) announced this morning, TiVo subscribers will soon be able to view on demand
video... The hardware cost for the souped up VCR is approximately $499 (current Circuit City price) for the
14-hour recorder and $999 for the 30-hour. Users also pay a $9.95 monthly subscription fee or a one-time
(lifetime) subscription fee of $199, which is annualized by the company over four years (the projected lifespan
of the recorder) and is shared with several partners... The company went public in September at $16 per
share. TiVo's IPO was followed by the commercial launch of the subscription service, which as of October had
4,300 subscribers and was being distributed through 520 retail stores... Although the personal television
market is relatively new, company already faces stiff competition from more established and/or recognized
names such as WebTV, Replay Networks and America Online. Moreover, the company's business model will
soon be tested in court by a coalition of broadcast networks (including NBC, CBS, ABC/Disney) that would
probably prefer to put TiVo out of business, but might settle for the company paying fees to license their
programming. At stake is a significant piece of the multi-billion television advertising market. Not only does
the TiVo service allow subscribers to view programming without normal commercial breaks, TiVo is attempting
to move into the networks' territory by beaming in its own personalized commercials... When the company
reports results later this month, TIVO expected to have racked up red ink of $5.02 a share. The company's
loss is projected to narrow to $1.90 per share in 2000... One more thing, the U.S. equity market has
traditionally not been kind to consumer electronics retailers over the long-term. Do you member Atari or
Zenith? Only in a momentum-driven, bull market does this stock ever reach $59 a share (all-time high). In fact,
only in this market does a company like TiVo ever make it past the venture stages of financing. - DS
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- Netconductor.com |
