TiVo Inc. (TIVO:US), the digital-video recorder pioneer, reported a second-quarter profit of $268.9 million, boosted by legal settlements, and forecast earnings to continue through this year and in fiscal 2015.
Net income of $1.96 a share included $490 million from lawsuits with Cisco Systems Inc. (CSCO:US) and Google Inc. (GOOG:US)’s Motorola Mobility, San Jose, California-based TiVo said yesterday in a statement. The results compared with a loss of $27.7 million, or 23 cents, a year earlier.
TiVo has won about $1.6 billion from lawsuits over the use of its DVR technology. The latest settlements will increase licensing revenue in the future, the company said, allowing it to become profitable on an ongoing basis. For the last fiscal year, TiVo posted (TIVO:US) a net loss of $5.26 million.
“TiVo has been asked for a decade, ‘When do you hit profitability?’” Chief Executive Officer Tom Rogers said in an interview. “We are making a clear statement here that we are profitable on a sustaining basis.”
The company will be profitable for the remainder of the fiscal year ending in January and through the following year, Rogers said. In fiscal 2015, the company’s adjusted earnings before interest, taxes, depreciation and amortization will exceed $100 million, helped by about $70 million in license revenue and a $30 million decrease in litigation costs, Rogers also said.
“Many people are looking through the impact of licensing streams and just giving them credit for the cash balance from these deals,” said Rob Sanderson, an analyst at MKM Partners LLC in Greenwich, Connecticut. He recommends buying the shares.
In the quarter ended in July, sales gained 53 percent to $100.1 million, beating the $86.4 million average of analysts’ estimates.
The stock rose 2 percent to $11.19 in extended trading yesterday, after falling 1.6 percent to $10.97 at the close in New York. The shares have dropped 11 percent this year.
TiVo is seeking to reverse sliding retail sales with new Roamio set-top boxes that can better access streaming services including Netflix Inc. (NFLX:US) and deliver recorded programs to mobile devices. The company has lost retail customers as pay-TV services offer more streaming and on-demand video options, and develop mobile software for so-called TV Everywhere viewing seen on Apple Inc. (AAPL:US) iPads and Android devices.
The company sells its own set-top boxes and also licenses its technology to pay-TV operators such as DirecTV (DTV:US) and Comcast Corp. that rent units to subscribers. To shore up the slowing retail business, TiVo is selling customers the Roamio product line, offering the latest viewing technologies for $200 to $600, plus a monthly service fee of $15.
TiVo has about $1 billion in cash and has more than it needs, Rogers said. It repurchased $60 million of stock in the second quarter and more than $100 million remains in its buyback program, Chief Financial Officer Naveen Chopra said on a conference call yesterday.
The company plans to continue repurchasing stock and views buying back shares as the preferred way to return value to investors, Rogers said.
TiVo will have lower research and development costs this year compared with a year earlier and plans to further reduce those expenses in 2015, Rogers said.
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