Tivo first-quarter profit rises on lower costs

By Gina Keating

LOS ANGELES (Reuters) - Digital video recorder maker TiVo Inc <TIVO.O> on Wednesday reported an unexpected first-quarter profit as a result of lower spending on marketing and research and development.

TiVo Chief Executive Tom Rogers said the company enjoyed its first quarter ever of being "comfortably net income positive," achieved by improved marketing and managing of its standalone TiVo business -- which investors feared was a drag on its other ventures.

"It's our effort to make sure that our standalone TiVo business won't cloud the enthusiasm people have for our other projects," Rogers told Reuters in an interview on Wednesday.

The other projects include long-running patent infringement claims against EchoStar Corp <SATS.O> and Dish Network Corp <DISH.O>, expected to result in licensing fees for TiVo; U.S. and international cable, satellite and telecom partnerships; and content deals like one announced on Wednesday with the Walt Disney Co. <DIS.N>

Rogers said second-quarter results would be lower than Wall Street expectations because of higher marketing costs related to summer holidays and expenses associated with the EchoStar and Dish litigation.

The company said net income for the quarter ended April 30 rose to $3.6 million, or 4 cents per share, from $835,000, or 1 cent per share, in the year-ago quarter.

Service and technology revenues fell to $54.9 million, from $58.1 million for the same period last year.

Analysts, on average, expected a net loss of 1 cent per share and service and technology revenues of $55.5 million, according to Reuters Estimates.

The company forecast a second-quarter net loss ranging from $2 million to $4 million, and a profit excluding certain items of $3 million to $5 million.

TiVo expects service and technology revenues, the bulk of its sales, to range from $53 million to $55 million in the second quarter.

TiVo's revenue forecast was lighter than Wall Street's expected $56.1 million, and its expected net loss was wider than the Street's forecast for a loss of $1.4 million, according to Reuters Estimates.

TiVo-owned subscriptions were flat at 1.7 million, and the company's total subscriptions dropped by nearly 12 percent to 3.8 million from 4.3 million.

The company cut subscriber acquisition costs by 12 percent and its monthly churn rate, measuring subscription cancellations, improved to 1.3 percent from 1.5 percent a year earlier.

Following the earnings report, shares of TiVo see-sawed in extended trade as much as 2 percent above and below their close at $8.10 on Nasdaq, down 16 cents, or 1.9 percent.

(Reporting by Gina Keating; editing by Carol Bishopric, Gary Hill)