TiVo Loses 730,000 Subscribers As Legal Fees, Innovation Costs Eat At Revenues

Tivo display model

Innovation is expensive. So are legal fees. Those are the hard lessons TiVo (TIVO) learned last year.

TiVo beat expectations, coming out of 2009 with $68.4 million in revenue, up from $59.2 million. Services and tech revenue brought in $45.3 million of that total, while their hardware sales gave them the rest.

Thomson Reuters gave them a  $44.3 million estimate.

Although stock holders must have been happy with the news that the DVR manufacturer received a positive ruling in its patent infringement case against DISH Networks and EchoStar, and stood to collect about $300 million in damages and contempt sanctions.

But legal fees and research and development for TiVo Premiere are costing the company: In the fourth quarter, TiVo lost $10.2 million, or 9 cents per share, compared to a loss of $3.6 million, or 4 cents per share, in 2008’s same quarter.

They also continue to hemorrhage subscribers, reporting that they lost 730,000 consumers during the past year, a 22% decline. They have 2.605 million subscribers as of Jan. 31, 2010.

Here’s more from the Associated Press:

Looking ahead, TiVo said it expects to book service and technology revenue of $41 million to $43 million in the first quarter of its fiscal year 2011, far below the $48.8 million expected by analysts. The company forecast a loss of $19 million to $21 million. Analysts were expecting a loss of $5.5 million.

For fiscal 2010, TiVo lost $23.9 million, or 23 cents per share, compared with a profit of $103.6 million, or $1.01 per share, in fiscal 2009. The prior year included about $100 million in damages and interest it received from Dish Network Corp. on a patent-rights case. TiVo had sued Dish in 2004 for infringing on a DVR patent that allows viewers to pause, rewind and replay live TV.

Last week, TiVo also prevailed in a contempt hearing stemming from the patent-rights case and stands to collect about $300 million more in damages and contempt sanctions it has been awarded. Dish had redesigned its technology while the case was going on, but a federal court said even the workaround violated TiVo’s patent. Dish had appealed and lost. Now, the satellite TV operator is asking for a review by the full bench of U.S. Court of Appeals for the Federal Circuit in Washington.

Shares of TiVo, based in Alviso, were up 22 cents to $17.28 in after-hours trading.

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