Loss Widens On Legal Costs, Other Expenses
By Deborah Yao, Business Writer
PHILADELPHIA (AP) --Digital video recorder pioneer TiVo Inc. on Tuesday (5/25) reported a net loss in the first quarter — its sixth straight money-losing quarter as the company struggled with higher legal expenses and other costs that wiped out an increase in revenue.
While TiVo has a loyal following among hardcore TV fans who believe its user guide is superior to those offered by cable boxes, the company has had a history of losses typically resulting from higher hardware and research and development costs. Now, a six-year lawsuit against satellite TV company Dish Network Corp. for allegedly infringing on a DVR technology patent is taking a toll on the bottom line.
In recent years, TiVo has been lessening its dependence on DVRs sold directly to consumers as the main source of revenue by licensing its software to subscription TV operators such as cable company Comcast Corp., or letting them use its DVRs as their own, such as the case with RCN Corp., another cable provider. TiVo also has slashed prices on DVRs to consumers and marketed the units through more retailers.
On Tuesday, the company for the first time said it would incorporate its software into Internet-enabled Insignia TV sets, a brand from Best Buy Co. as it staves off competition from the likes of Google TV, a device that hooks up to a set-top box to bring the Web to the television.
“We are trying to make sure that TiVo has every possible path to framing the TV experience,” said CEO Tom Rogers in an interview with The Associated Press.
In the first quarter, TiVo lost $14.2 million, or 13 cents per share, in the quarter that ended April 30. In the same quarter last year it lost $3.9 million, or 4 cents per share.
TiVo incurred higher legal expenses as part of its lawsuit against Dish, a recurring cost that the company said will hurt the second quarter as well.
Revenue rose 11 percent to $61.4 million. Excluding hardware revenue, service and technology revenue came to $43.2 million, down from last year’s $48.5 million.
The results were better than the forecast of analysts surveyed by Thomson Reuters. They were expecting a loss of 16 cents per share and service and technology revenue of $42.8 million.
In the second quarter, TiVo is expecting a net loss of $17 million to $19 million and service and technology revenue of $40 million to $42 million. That would be worse than what analysts have been expecting, which is a loss of $14.6 million and service and technology revenue of $42.6 million.
Rogers said higher legal and R&D costs will hurt profitability in the quarter. Earlier this month, a federal appeals court gave Dish a lifeline after granting a full-court review of a decision by a three-judge panel of the same court that sided with TiVo. If Dish was denied the review, it would have had to cough up $300 million in damages and risked having to disable millions of its DVRs because they were found to have infringed on TiVo’s patent. But TiVo expects to prevail.
Google Opens Its Defense In Antitrust Case Alleging Monopoly Over Online Ad Technology
Google opened its defense against allegations that it holds an illegal monopoly on online advertising technology Friday with witness testimony saying the industry is vastly more complex and competitive than portrayed by the federal government.
"The industry has been exceptionally fluid over the last 18 years," said Scott Sheffer, a vice president for global partnerships at Google, the company's first witness at its antitrust trial in federal court in Alexandria.
The Justice Department and a coalition of states contend that Google built and maintained an illegal monopoly over the technology that facilitates the buying and selling of online ads seen by consumers.
Google counters that the government's case improperly focuses on a narrow type of online ads — essentially the rectangular ones that appear on the top and on the right-hand side of a webpage. In its opening statement, Google's lawyers said the Supreme Court has warned judges against taking action when dealing with rapidly emerging technology like what Sheffer described because of the risk of error or unintended consequences.
Google says defining the market so narrowly ignores the competition it faces from social media companies, Amazon, streaming TV providers and others who offer advertisers the means to reach online consumers.
Justice Department lawyers called witnesses to testify for two weeks before resting their case Friday afternoon, detailing the ways that automated ad exchanges conduct auctions in a matter of milliseconds to determine which ads are placed in front of which consumers and how much they cost.
The department contends the auctions are finessed in subtle ways that benefit Google to the exclusion of would-be competitors and in ways that prevent... Read More