Guest Blogger, Author at Zatz Not Funny!

Picasa Web Albums: A Big Hit?

Iâve received two online photo albums today from different friends of mine and both used Picasa Web Albums. I hadnât told either of them about Picasa (though Iâve told lots of other folks about Picasa!)

While there hasnât been a lot of coverage of it, my guess is that Picasa Web Albums is slowly becoming a gorilla in the online photo sharing space because of the quality of the Picasa client and because of itâs tight integration with Picasa Web Albums. I donât have any basis for this claim other than 1) I keep coming across more people using Picasa and 2) Iâm involved in product development and I think I can recognize a âhitâ product when I see one.

Quiet âhitsâ â as in successful products and companies that arenât spotlight-seeking and maybe arenât even that âsexyâ â are often the most interesting ones.

TiVo v EchoStar: A Response in Georgia

One TiVo stockholder’s take… EchoStar responded to Judge Duffey’s order to show cause with a lengthy set of documents outlining their reasons for believing the various documents in question are immune from discovery. Generally they take the position that the documents are simply internal work product that was never communicated to EchoStar. Without access to … Read more

TiVo v Echostar: Movement in Georgia

One stockholder’s take…

In the ongoing legal maneuvering over the disclosure of documents relating to the Merchant & Gould “Opinion Letter” (of non-infringement), Judge William Duffey of the U.S. Circuit Court in northern Georgia issued the following order on 3/22:

ORDER DIRECTING that Echostar and Homer Knearl SHOW CAUSE by 3/30/07, why the following documents should not be produced: MG PRIV 16, 27, 32-35, 37, 55, 68, 69, 72, 73, 75, 85, 88, 95, 105, 177, 179, 180, 271, 274, 276, 287, 291, and 305. Echostar or Knearl must state in detail for each document the privilege asserted, and the grounds for that privilege, including a description of the identity and role of each author, recipient, cc recipient, or bcc recipient of the document. IT IS FURTHER ORDERED that if any portion of the above documents was submitted to the Court in redacted form, unredacted copies be provided for in camera review by 3/30/07. These documents shall be marked in such a way as to allow the Court to discern easily which portions were previously redacted. Signed by Judge William S. Duffey Jr. on 3/22/07. (kt) (Entered: 03/22/2007)

The clarified rules of discovery issued by a U.S. Court of Appeals last year for this situation require documents to be produced to TiVo only if they were communicated by the law firm to the client (i.e., Echostar), or if they reference a communication with the client.

Size Matters: HTC Wings

While I’m as excited as the next gadget freak by all the talk of the new Apple iPhone, the mythical Google phone, and Palm’s next SmartPhone-move, the new HTC S730 (aka the HTC Wings) could actually be my next phone. I have the Cingular 2125 right now and the clincher for me is that the HTC Wings is about the same size and weight as my 2125 and it has a slideout keyboard.

Cingular 2125 size/weight:
116mm x 46mm x 18mm, 106 grams

HTC Wings size/weight:
100mm x 50mm x 19mm, 120 grams

TiVo’s Churn: A Closer Look

One stockholder’s take…

In its Q4 earnings release last week, TiVo stated that its churn had increased to 1.2%/month, up from about 0.9%. We took a closer look at this number and found some interesting results. When we did our financial analysis for ZNF in December, we devoted Appendix A to deriving real churn numbers from the data TiVo has provided. Recall that we found the churn for recurring subscribers to be about 1.38%/month. Also recall that “Lifetime” subscribers do not churn until 1) the end of the four-year period TiVo uses to amortize their revenue, and 2) the box has not contacted the TiVo service for six months. We discovered that Lifetime subscribers exhibited a “bulk churn” (i.e., an immediate churn at the end of the four-year period) of about 19%, and an ongoing churn of the fully-amortized subs of about 1.2% per month. (Both the recurring and Lifetime churn can be bigger than the total churn number TiVo provides because TiVo includes the entire body of lifetime subscribers, including those not fully amortized.)

At the end of Q3, TiVo had 138,000 fully-amortized Lifetime subscribers. At the end of Q4, that number was 166,000. But in the four-year-ago period, TiVo added approximately 50,000 Lifetime subscribers, meaning that without churn, the fully amortized number would have been 188,000. Thus, there were about 22,000 lifetime subscriptions cancelled in Q4. This result requires a significant bump in both bulk and ongoing churn of the Lifetime subscribers (we’re using 27% and 2.2%, but the numbers are interdependent and could therefore be any combination that results in the same total churn).

That leaves 40,000 cancellations of recurring subscribers which, when divided by about 955,000 (average) recurring subs during the quarter, gives us a churn of recurring subscribers of about 1.4%/month – nearly unchanged from the average over the trailing twelve month period.

TiVo Q4: Turned The Corner? Low Cost HD Box Cometh?

One stockholder’s take…

Our initial impression after reading TiVo’s fiscal fourth quarter earnings release and listening to yesterday’s conference call is that the company may finally have its financial feet under it. While it will take some time to fully digest the financials and commentary, we think it will be increasingly hard for any lingering doomsayers to argue that TiVo is a failing enterprise. Continued growth, improving financials, and the impending MSO rollouts tell us that TiVo will be around for many years to come, and may even begin to thrive.

Some highlights:

On January 26th, in response to a TiVo motion to enforce his earlier order to deliver certain documents, a frustrated-sounding U.S. District Court Judge Duffey slapped the wrists of Echostar and “non-party witness” Homer Knearl, requiring them to sign pre-prepared affidavits that they had, in fact, complied with his order. Duffey accused Knearl and Echostar of playing “a legal shell game” and called their earlier responses “vague, equivocal, and qualified.”

TiVo has been seeking documents produced by Knearl and his former associates at the Merchant and Gould law firm that relate to a legal opinion of non-infringement that M&G gave Echostar in their patent dispute with TiVo. That opinion was not allowed into evidence at trial (primarily because of Echostar’s failure to deliver related documents under an earlier court order), and has now become a significant factor in Echostar’s appeal and TiVo’s counter-appeal.

TiVo By The Numbers: Reloaded

Financial analysis isnât something Iâm prepared to tackle publicly, so Iâve brought in some muscle for a multi-part series on TiVoâs numbers. Obviously this is speculative in nature and just one stockholderâs interpretation of the limited information TiVo chooses to disclose. Your mileage may vary. -DZ

Preface

One of the problems one encounters when doing research, or “digging into the numbers” is that one can always dig deeper. In digging into the later parts of this TiVo story, we discovered that we could derive much more accurate and robust figures (particularly for churn and revenue from subscriptions and advertising) than we had initially. While our general conclusions are the same, the new numbers are so much of an improvement in terms of both accuracy and reliability that we felt compelled to revise them. What follows are revised numbers, some greater detail as to the way we derived them, and some clarification (we hope) of some of the ideas presented in the earlier version. Of particular interest are Appendices A and B, which are all-new, and discuss the way we derive the important churn and revenue numbers. We have also added a new asset class to TiVo’s valuation that we did not consider before. Finally, we have dropped the discussion of ROI and MIRR as they lengthened the article and did not provide much additional insight over the “gold standard” of NPV.

As before, we try at all opportunities to make conservative assumptions. We realize that our assumptions are conservative almost to the point of pessimism, and we have been accused of just that. But TiVo is a company that lives under a great shadow of Wall Street pessimism, so any show of optimism may be seen as a lack of credibility. We leave it to the reader to decide by what factor our estimates need to be adjusted for our excesses of pessimism.

INTRODUCTION

TiVo is an enigmatic company. While management peppers us with regular press releases hyping their latest deal or newest technology, it rarely provides the kind of information we need to put a value on anything â be it a new advertising relationship, distribution deal, or their own financial statements. In this article we will engage in a bit of 8-K and10-Q exegesis in an effort to understand what is really going on at TiVo.