TiVo profits from EchoStar litigation

This post was updated at 3 p.m. PST with information from the earnings call.

EchoStar's loss was TiVo's gain during the third quarter of 2008.

Alviso, Calif.-based TiVo on Tuesday announced it recorded profits of $100.6 million for the quarter, or 98 cents per share, compared with a loss of $8 million for the same quarter a year ago.

The staggering change in fortunes for the DVR maker was due to the patent litigation judgment it won against EchoStar. EchoStar paid TiVo $105 million in damages during the quarter--if it hadn't, TiVo would have reported a net loss of $900,000.

The company's core business continues to fall off.

TiVo signed up 44,000 new subscribers during the quarter, but that's 25 percent fewer than the 69,000 signed up during the third quarter last year. Overall, the company's subscriptions total 3.6 million, compared with the 3.7 million counted at the end of the second quarter of this year.

Money made this quarter from its subscription service, technology, and hardware decreased in each category. Total revenue came in at $64.5 million, down from $75.5 million a year ago.

And the company expects to feel the impact of the financial crisis.

"Though we are pleased with our results this quarter, we recognize that no business is immune to the challenges of the current economic climate, which we expect will adversely affect consumer electronics companies, including TiVo, during the holiday season," said TiVo CEO Tom Rogers on a conference call with investors Tuesday.

The company also addressed the impact of Circuit City's bankruptcy. TiVo won't be directly impacted by the bankruptcy filing, according to new CFO Anna Brunell.

"But the bad news is we'll see less contribution this holiday season from our second-largest retail partner," she said. "That makes what will be a difficult selling season even more difficult."

The company plans to look at more ways to decrease costs, including laying off 7 percent of its workforce, as announced last week.

Looking ahead, TiVo said it's expecting fourth-quarter revenue between $47 million and $49 million, and a net loss of between $10 million and $12 million.

TiVo shares rose more than 1.5 percent to reach $4.50 in after-hours trading Tuesday.

[Stormspace]

Tivo continues to suffer from a high cost of entry which was made better in the last couple of years with low cost Series 2 units. However with the introduction of HD Tivo has once again become an expensive proposition. Also with the emphasis on HD the Standard Def Series 2 units don' t have the same appeal they once did so it doesn't surprise me that they aren't doing well. Tivo needs to figure out a way to make money on the subscription so they don't have to sell the hardware at such a high price.

[atici]

Duh, no wonder... I tried the HD unit and there is no way those CableCards would work. Your cable company doesn't want to deal with it + 6 out of 10 cards arrive broken. It's not TiVo's fault but that's how things are. They need to bring the issue to FCC (who required cable companies to provide such a means to access locked content giving rise to the cablecards) so that the cable companies will fully comply.

[johnofthetown]

I'm not sorry for Tivo. A wew weeks ago they eliminated their customer's access in the US territories like Puerto Rico, to the broadband features, like the Swivel Search and the podcasts. We had access to those features before. Wihout them Tivo is just a glorified and expensive time shift box, not worth the cost. I keep it only because I took advantage of the lifetime subscription years ago. Otherwise I would have got a DVR from my cable company.