With better-than-expected quarterly results, an announcement that it's acquired middleware provider Cubiware, and rumors increasing that TiVo is working out a way to provide a linear OTT service using the tech it acquired from defunct Aereo, analysts are looking on the DVR maker with a more favorable eye.
Jefferies maintained a "buy" rating for TiVo on Wednesday with a target price of $18, following the company's first-quarter earnings report. "Another solid quarter straight out of the TiVo playbook: more subs, more deals, more innovation, less operating expense, and fewer shares," the firm said in a research note.
TiVo has steadily built a number of partnerships with Tier 2 cable providers and satellite provider DirecTV (NASDAQ: DTV), providing a DVR with integrated over-the-top services like Netflix (NASDAQ: NFLX). That business added 341,000 subscribers to TiVo's books via those U.S. MSOs in just the first quarter. Its total number of subscribers is now above 4.5 million, with 3.5 million of those coming from MSOs. For the first time in eight years, its retail business also moved upward, with subscribers growing 27 percent.
Another element that is driving its stock upward is its acquisition of Cubiware. This provider of software and middleware solutions for pay-TV providers looking to expand into multiscreen has a presence in 25 countries, and has deployed with about 40 MSOs. That immediately boosts TiVo's international presence, an arena it only recently stepped into with its purchase of DigitalSmiths, a deal that closed in February.
"This product expansion complements our current international TiVo and DigitalSmiths product lines, enabling us to deliver a comprehensive portfolio of solutions for video distributors across different distribution platforms -- on premise, cloud or hybrid environments," said TiVo President-CEO Tom Rogers in a press release.
"Cubiware's solution is integrated with a variety of leading set-top-box providers enabling over 4 million devices in the field," said Jakub Gorski, the Warsaw-based provider's CEO and co-founder. "Becoming part of TiVo will enable us to offer more advanced solutions to our current customers and pursue a broader set of prospects with a proposition that offers compelling functionality at a very attractive price point."
The industry is also watching what TiVo plans to do with the Aereo assets it acquired from the bankrupt linear OTT pioneer earlier this year. TiVo owns Aereo's customer lists and its trademarks, while other companies snatched up its patents, equipment and technology. The company is expected to make an announcement "sometime in July" around this topic, Multichannel News noted. However, Rogers hinted in a Wednesday interview that any Aereo-related efforts will be built around its Roamio OTA (over-the-air) DVR.
For the second quarter, TiVo said it expects to see service and technology revenues between $94 million and $97 million, and net income of $7 million to $10 million.
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