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TiVo Inc. (TIVO)

F3Q2011 (Qtr End 10/31/2010) Earnings Call Transcript

November 23, 2010 5:00 pm ET


Derrick Nueman - Head of IR

Tom Rogers - CEO

Anna Brunelle - CFO

Naveen Chopra - SVP of Business Development & Corporate Strategy

Matt Zinn - General Counsel


Bridget Weishaar - JPMorgan

Tony Wible - Janney

Barton Crockett - Lazard Capital Markets

Rich Tullo - Albert Fried and Company

Edward Williams - BMO Capital Market

Mark Argentino - Craig-Hallum Capital

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Todd Mitchell - Kaufman Brothers

Doug Reid- Stifel Nicolaus



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At this time I would like to welcome everyone to the TiVo third quarter fiscal 2011 conference call. (Operator Instructions) I would now like to turn the conference over to Derrick Nueman, Head of Investor Relations.

Derrick Nueman

Thank you and good afternoon. With me today are Tom Rogers, CEO; Anna Brunelle, CFO; Naveen Chopra, SVP of Business Development & Corporate Strategy; and Matt Zinn, our General Counsel.

We are here today to discuss TiVo’s financial results for third quarter ending October 31, 2010. We have just distributed a press release and 8-K detailing our financial results. We have also released a financial and key metrics summary, which is also posted on Investor Relations web site. Additionally, we will post a recording of this call later today on our Investor Relations web site.

The prepared remarks today should take about 30 minutes and will be followed by a question-and-answer session.

Our discussion today includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relates upon other things, TiVo’s future subscription, advertising and research businesses; profitability, operations, and financial performance and guidance, including future marketing in holiday pricing plans, R&D, litigation and other operating expenditures; distribution of TiVo service domestically with DIRECTV, RCN, Suddenlink, Comcast and Cox; and internationally with Virgin Media, U.K.; ONO in Spain; Canal Digital in Scandinavia; and Seven HTS in the Australia and New Zealand.

TiVo’s current and future service features and product releases as well as TiVo's ongoing litigation with EchoStar, AT&T, Verizon and Microsoft.

You can identify these statements by the use of terminologies such as guidance, believe, expect, will or similar forward-looking terms. We caution you not to put undue reliance on these forward-looking statements as they involve risks and uncertainties that may cause actual results to vary materially from the forward-looking statements.

Factors that may cause actual results to differ materially include delays in development, competitive service offerings and lack of market acceptance, as well as other factors described under Risk Factors in our public reports filed with the SEC, including our latest 10-K and 10-Q. Any forward-looking statements made on the call today reflect analysis as of today, and we have no plans or duty to update them.

Additionally, some of the metrics and financial information provided in today’s call, include non-GAAP measures. Please see our third quarter 2011 key metrics trend sheet for reconciliation of these items.

With that, I'll now turn over the call to Tom.

Tom Rogers

Thanks, Derrick good afternoon, everyone. You may hear some background noise from the outside, and if you do, I apologize. Before we get into the details of the quarter, let me briefly touch on our ongoing litigation with EchoStar.

Two weeks ago, we presented our argument to the United States Court of Appeals for the Federal Circuit, as to why the District Court was correct in holding EchoStar in contempt for violating the Court's injunction in multiple ways. It is important to reiterate. This case will determine whether in practice District Court and enforce injunctions against determined infringers, who overstate the significance of minor changes with the aim of requiring the pattern holder to institute a whole new trial.

Allowing EchoStars position to prevail would create an endless cycle of new trials based on dressed-up work around claims, turning pattern litigation into even more of an enormous terrain on judicial resources. We remain confident in our legal and policy positions and the outcome, and expect the decision in the next several months.

Additionally, it is worth pointing out that the United States PTO recently affirmed the validity without amendment or narrowing of all claims of our time or pattern at issue for the third time, making our pattern even stronger. We believe this action will benefit us in all of our ongoing litigations involving the patterns.

Now to the quarter. The television world is changing faster than you can find an (inaudible) television show or YouTube video on a TiVo premier box. That's pretty fast. But we're staying ahead of the new world order of television where consumers are increasingly looking for a simple way to bring content from pretty much anywhere directly to the TV.

Today, we are the only ones out there that offer a true advance television solution, that seamlessly marries linear and operator video on demand, with the vast new world of broadband content in one box with one search and one user interface. And the consumer in the operator communities have taken noticed.

You might respond to that statement by asking, what about the rise of all those retail gadgets and specialty devices like Apple TV and Google TV. They claim to have the answer to bring in internet content to the television. The answer, they only address a small component of the future television experience.

The device is out today are all essentially fighting for what we call input 2 on the TV set. None of them deliver and marry the complete spectrum of content from traditional linear channels, which still account for some 99% of all TV viewing, to cable video on demand and internet content, nor do any of them give you the ability to search across all this content at the same time. For our part, TiVo is happy to own input 1 where we uniquely tie in the new TV options to the traditional one.

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