Opinion on  TiVo Inc (TIVO)     Sector: Services  >  Industry: Broadcasting & Cable TV
Tivo: Trial test with Amazon movie downloading starts.

After the market close, Tivo announced that movie downloading service to view the downloaded movie via internet on TV set will be available for certain Tivo DVR subscribers on a trial basis. This service is expected to be widely deployed to 1.5 mil standalone Tivo subscribers sometime this year.

(http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070207:MTFH84910_2007-02-07_05-01-14_N06308517&type=comktNews&rpc=44)

After the market close, Cisco reported better than expected earning and cites digital downloading of the video as a huge catalyst for the future growth of the company. Tivo has been the poor performer when it comes to investment return for its shareholders. The stock has been a good candidate for trading opportunities as the stock gyrated from $5 to $8 several times last two years.

Today, Tivo is sitting at lower range of its trading range. Investors have pushed the stock down since last fall. They have been impatient with ongoing litigation against Dish which is entering appeal process by Dish. At this point, I believe that the stock has most of the negative outcome built into the stock price. Yet the positive catalysts may be around the corner. Tivo will report its earning in early March. The company has guided the sub add outlook for the coming Q lower during last earning call. However, January Q is the traditionally the strongest Q of the year for the company. Tivo is also deploying its long-waited Comcast service this spring. Finally, other cable deals may follow after successful launch of the Tivo service with Comcast. As such, the stock may soon trade higher on these expectations towards the higher trading range.

Ultimately, if Tivo cannot prove to the investors that it has a viable business model, I would expect the company would be taken out at a higher premium this year. Many speculate it could be Google, Yahoo, or Cisco who acquires the company. However, if the service with Comcast proceeds smoothly, don’t be surprised if Comcast step up and takes out Tivo.


The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)

Please check out the archives for past posting on individual stocks. Also market commentary and weekly communication on the core holding list are available at www.investorhives.com on a membership basis. The membership is free for everyone. Simply apply for filthyrich hive membership at www.investorhives.com. Thank you for visiting my blog.

In the report issued on Feb 7th, SmithBarney had a following summary on Tivo announcement on partnership with movie downloading service with AMZN.

- TIVO announced a partnership with AMZN to provide internet movie downloads on TIVO's standalone boxes. While details are limited, we believe it could be a game changer for TIVO and movie d'load svs by providing an economical means to get PC content to living rooms. The product looks to have support from most of major studios and will "soon" launch to the public.

- Strategically, the product is part of TIVO's d'load strategy and follows other new prods that support user generated, TV, & music content. We believe these help make clear that TIVO is not just a DVR, but a living room media hub.

- While we do not expect a direct meaningful impact from the service near-term, it could boost standalone sales in 2H07 and, combined with cable deal rollouts, benefit overall 2H07 results. We maintain our Buy rating and $11 target price as we see TIVO continuing to gain traction through: 1) its stand-alone business, 2) MSO deals, and 3) DVR advertising.

In summary, the firm thinks that Tivo DVR service is beyond the simple DVR hardware and software provider. Tivo device is poised to become media hub where all internet content, TV media content, music content (recent deal with Real Network), and movie content (amazon and independent film producer) all converge on powerful search platform. In my opinion, this is the trend of the future that will bring significant business model change in the TV ad and content delivery industry. Tivo is revolutionalizing the industry and continues to differentiate its product against simple generic DVR makers. Tivo's search capability and ad delivery platform with its software enables the company to target significant business opportunities for the industry that Tivo is currently revolutionizing.

Although the profitability still remains elusive for the company as the industry is yet to embrace the upcoming model changes with open arm, it is inevitable that the trend will continue to point towards rapidly changing business climate for large media and cable companies. Tivo is in the heart of this phenomena and only question remains to whether the company would be around long enough to really take advantage of the revolution that it is creating for its market.

I continue to like Tivo's chance that the company will be able to grab niche (better yet large) market within DVR segment and the stock performance will eventually follow.


The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)

Please check out the archives for past posting on individual stocks. Also market commentary and weekly communication on the core holding list are available at www.investorhives.com on a membership basis. The membership is free for everyone. Simply apply for filthyrich hive membership at www.investorhives.com. Thank you for visiting my blog.