Is It TiVo’s Last Christmas?

TiVo set-top boxes can bring the immediate past back to life. But who can resuscitate TiVo?

With consumer electronics a growing tradition for holiday shopping lists, the company that pioneered digital-video recording (DVR) once reaped big Yuletide benefits. And TiVo, like Google, lent its name to the popular lexicon. But unlike the search-engine leader – whose stock passed $500 last week – TiVo has seen better days.

Gene Munster, senior research analyst at Piper Jaffrey, had some insights on what’s hurting the firm that once promised “TV the way you want it.” And what may rewind it back to better value.

Munster, who holds a $4 price target for the firm, sees a “big problem” for TiVo: “Cable companies are greedy and consumers are cheap,” he declares. And when cable TV providers like Time Warner and Comcast offer their own built-in DVR systems, well, consumers are just not sentimental about the industry trailblazer. “Why pay $12 a month for TiVo when you can get very similar service for [an average] $5 a month?”

As to TiVo’s sally into the high-definition arena, Munster casts a jaundiced eye on the firm’s $800 price tag for the actual box, when cable providers usually offer “that same box” for a monthly subscription fee of $12. He muses that, “this is an example [in which] being early wasn’t necessarily the best thing.”

It gets worse: The analyst noted that in the last quarter, TiVo added 1,000 subscribers; but in the prior period, it lured in 53,000; and before that, 350,000 subscribers. With a dependency on new sign-ups apparently rivaling that of Sirius Satellite Radio and XM Satellite Radio, is there any hope for the company with the retro rabbit-eared TV set logo?

Yes, according to Munster. He says the company has its own intrinsic worth – “TiVo is a verb” – and believes that “ultimately, there is take-over value, ” value for the firm’s potentially lethal rivals, the cable companies. “I wouldn’t be surprised if a cable company ultimately buys them and just folds the brand into their offering,” he says.