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TiVo Shows Q2 Profit, Expects Q3 Loss

8/28/2008 11:19:00 AM Eastern

Alivso, Calif. — DVR pioneer TiVo reported a quarterly profit, marking the first time the company has shown back-to-back profitable quarters in its 11-year history.

The company showed $2.9 million in net income compared with a loss of $17.7 million in its fiscal second quarter a year ago.

Revenue in the quarter rose 4 percent to $65.2 million, including $53.5 million in services and technology.

TiVo said the improved performance was related in part to higher margins on hardware and reduced marketing expenses.

However, the outlook for the third quarter was not as rosy. TiVo forecast a fiscal third-quarter loss, due in part to legal costs related to its ongoing patent suit against satellite TV provider EchoStar and pre-Holiday expenditures for inventory and marketing costs.

For the third quarter, TiVo said it expects service and technology revenues to range between $49 million to $51 million, and a net loss of between $7 million to $9 million.

TiVo’s subscriber base has been dropping due to competition from less-featured digital video recorders from cable and satellite TV services. It reportedly has 1.7 million subscribers out of an estimated 26 million U.S. DVR base.

To help generate more appeal for its products and services, the company also announced on Wednesday that is has formed a partnership with Entertainment Weekly (EW) to provide “What to Watch” TV recommendations that subscribers’ DVRs will record automatically.

The arrangement is similar to one TiVo launched in May with the Chicago Tribune. With that service, users can view shows selected by the newspaper’s TV critic. Financial terms of the EW deal were not disclosed.

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