TiVo Deal Gets Lukewarm Reception
Updated from 2:49 p.m. EST
As part of their seven-year agreement, Comcast will market TiVo's recording service to its 21.5 million cable customers. TiVo will introduce a new version of its service that will work with the digital video recorders, or DVRs, that Comcast is currently offering customers. The companies expect a widespread implementation of the service in mid-to-late 2006.
This is TiVo's second deal with a major distribution partner and comes as its other partner, DirecTV (DTV), has begun to introduce a competing service to TiVo's. It also comes as analysts and investors have grown increasingly dubious about TiVo's prospects.On the news of the deal, TiVo's stock jumped as much as $2.30, or 60%, to $6.13. In recent trading, the company's shares surged $2.67, or 70%, to $6.50 a share. But some analysts rushed in to pour some cold water on the market's enthusiasm. After the initial run-up, Janco Partners analyst April Horace downgraded TiVo's stock to sell from market perform. Horace questioned how and to what extent Comcast will promote its TiVo offering when it becomes available, given that Comcast has in the past put more emphasis on promoting other video services. Meanwhile, the deal with Comcast may help end TiVo's already rocky relationship with DirecTV, Horace said. And it may undermine sales of TiVo's more profitable stand-alone service, she said. "While the announcement between TiVo and Comcast sounds good, we are not as sold on the deal," said Horace in her note. "In light of the risks associated with the unknowns with Comcast ... we feel the shares have more downside risks than any [further] upside." Horace does not have a position in TiVo shares and Janco has not received fees for investment banking from TiVo in the last year.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV