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.
