TiVo Sues Verizon and AT&T as it Posts 2Q Loss

ALVISO, CALIF:Shares of TiVo fell nearly 7 percent mid-day after the DVR maker posted a second-quarter loss and cut expectations for its third quarter. TiVo also filed suit in the United States District Court, Eastern District of Texas against AT&T Inc. and Verizon Communications for infringing on three of its patents.

TiVo (NASDAQ:TIVO) posted a net loss of $2.9 million on revenues of $57.4 million for its second fiscal quarter of 2010, ending July 31. For the same period a year ago, the company had net income of $2.9 million on $65.2 million in revenues. Earnings before interest, taxes, depreciation and amortization were $5.2 million, better than TiVo’s guidance of a $2 million break-even.

Subscriptions owned by TiVo (rather than third-party providers) increased by a gross of 31,000 for the quarter, compared to 36,000 a year ago. The churn rate was about 1.5 percent; TiVo ended the quarter with 1.6 million owned subscriptions, and 3 million total.

For 3Q10, TiVo expects service and technology revenues of $46 to $48 million. (Service and technology yielded $48.8 million in 2Q; hardware revenues accounted for the rest.) Net loss for the upcoming quarter is projected at $8 million to $10 million. Adjusted EBITDA is once again expected to come in break-even at $2 million.

ReutersEstimates expected service and tech revenues to come in at $47 million, with net income of $5.11 million and EBITDA of $1.43 million. Shares of the company dropped from $10.60 to $9.78 during morning trading but inched back above $10 at mid-day.

The patents at issue in TiVo’s pursuit of the big telcoTV providers cover its Multimedia Time Warping System, Time-Shifting Multimedia Content Stream System, and its Automatic Playback Overshoot Correction System.

The complaints seek damages for past infringement and a permanent injunction, similar to one issued by the same court against Dish Network and its satellite farmer, EchoStar.

More TVB coverage of TiVo:
July 2, 2009: “Dish Gets a Break in TiVo Ruling”
Dish Network got a break last night when a federal court extended the company’s ability to use the digital recording function in its set-top receivers. A lower court had ruled in early June that the recording function violated patents belonging to TiVo, and that it had to be disabled.
July 13, 2009: “TiVo Teams with Best Buy”
TiVo is tossing in with Best Buy to sell its digital video recorders. The announcement comes after a recent court ruling allowing Dish Network to continue using digital video recording technology similar to TiVo’s.

June 4, 2009: “Court Puts TiVo’s Dish Defeat on Hold”
A federal appeals court issued a temporary stay yesterday on a lower-court decision issued Tuesday in favor of TiVo.

January 14, 2009: “DBS Operator Continues Patent Spat with TiVo”
The folks at the Dish Network (NASDAQ: DISH) have managed to get the patent police to take another look at TiVo’s time-shifting patent. TiVo and Dish have fought for years over the technology, which TiVo pioneered in its eponymous boxes in the 1990s. Dish eventually incorporated the function into its own set-top boxes, setting off a patent dispute between the two companies.