Financial analysis isn’’t something I’m prepared to tackle publicly, so I’ve brought in some muscle for a multi-part series on TiVo’s numbers. Obviously this is speculative in nature and just one stockholder’s interpretation of the limited information TiVo chooses to disclose. Your mileage may vary. -DZ

As we listened to the 3Q earnings call from TiVo, we were struck by a number of statements made by TiVo’s management that seemed to be clues as to what we can expect from the company in the future. In this installment, we will look at some of these clues in light of the financial analysis we have just completed, and see what we can learn. But be advised: you are entering an area of higher speculation and greater interpretation than we have visited before.

Subsidize Less, Advertise More

We commented in Part 2 about the apparent reversal of position on hardware subsidy after working for so long to get the boxes to a zero-upfront model:

Following the holiday period, we will be evaluating the success generated by this kind of hardware pricing approach versus an approach where there is less rebate on hardware and a greater proportion dedicated to advertising the TiVo product. (Rogers)

We noted in Part 2 the advantages and disadvantages of an advertising approach versus a subsidy approach. One particularly important advantage to advertising was noted by Rogers:

Particularly given all the differentiation that we have now worked hard to accomplish, we really think that there is a credible basis to think about advertising benefiting TiVo and not just educating people about DVRs in general, where we would not necessarily see the benefit in TiVo sales of that increased advertising spend.

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