Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Rovi (Nasdaq: ROVI) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been weak operating cash flow.

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Highlights from the ratings report include:
  • Net operating cash flow has decreased to $28.83 million or 39.61% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, ROVI CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • ROVI, with its decline in revenue, underperformed when compared the industry average of 7.7%. Since the same quarter one year prior, revenues fell by 12.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • ROVI's debt-to-equity ratio of 0.96 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 5.86 is very high and demonstrates very strong liquidity.
  • The net income growth from the same quarter one year ago has exceeded that of the Software industry average, but is less than that of the S&P 500. The net income increased by 13.9% when compared to the same quarter one year prior, going from -$13.33 million to -$11.47 million.

Rovi Corporation provides integrated solutions that enable the discovery, delivery, display, and monetization of digital entertainment. Rovi has a market cap of $1.71 billion and is part of the technology sector and computer software & services industry. Shares are up 8.6% year to date as of the close of trading on Wednesday.

You can view the full Rovi Ratings Report or get investment ideas from our investment research center.

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