TiVo Loss Narrows After Biggest Subscriber Lift in 7 Years

TiVo Inc. (TIVO), the developer of digital-video recorders, posted a narrower first-quarter loss after adding the most pay-TV subscribers in seven years.

The net loss of $10.3 million, or 9 cents a share, compared with a loss of $20.8 million, or 17 cents, a year earlier, Alviso, California-based TiVo said today in a statement. Analysts had forecast a loss of 14 cents. Sales rose 22 percent to $82.6 million in the quarter ended April 30, beating estimates of $77.2 million.

The company is holding “constructive” talks with John Malone’s Liberty Global Inc. (LBTYA), which is buying Virgin Media Inc. (VMED), a TiVo customer, Chief Executive Officer Tom Rogers said today. TiVo is increasing subscribers by providing its Web-connected digital-video recorders to pay-TV systems, including the U.K.’s Virgin Media and Atlantic Broadband, a new U.S. client.

“We’ve looked at it as a potential opportunity,” Rogers said in an interview. “Liberty Global has a lot of subs around the world. So far the relationship has developed quite well.”

TiVo rose 1.1 percent to $12.80 in extended trading after the announcement. The stock added 0.6 percent to $12.66 at the close in New York, and has advanced 2.8 percent this year.

The company added 277,000 pay-TV users in the quarter, the most in seven years, according to the statement.

TiVo has been widening gross margins by selling advanced set-top boxes with more storage and the ability to record several shows at once.

Quarterly Forecast

This quarter, TiVo anticipates service and technology revenue of $68 million to $70 million. The company expects a net loss of $13 million to $16 million and cash flow ranging from $1 million to a deficit of $2 million.

The company is pursuing patent infringement litigation against Motorola Mobility, which Google Inc. (GOOG) bought last year, and Cisco Systems Inc. (CSCO) over use of recording technology in set-top boxes they made. Time Warner Cable Inc. (TWC) is a defendant in both cases. Rogers has said a victory could result in billions of dollars.

TiVo has already received more than $1 billion in awards and settlements over patent cases against Dish Network Corp. (DISH), AT&T Inc. and Verizon Communications Inc. since 2011.

The company will use proceeds from litigation to continue repurchasing stock, Rogers said. In the first quarter, the company bought $31 million of its stock, according to the statement. Rogers said TiVo would also consider “small, tuck-in” acquisitions.

“We continue to think about how we can drive the share price and deliver value to our shareholders,” Rogers said.

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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