TIVO Q1 Earnings

Late this week,Tivo (Nasdaq:TIVO), one of the pioneers in digital video recording, announced earnings for the quarter ended April 30th.  The Company beat analyst expectations and reported its first ever profitable quarter but the overall news was mixed.

Net income was $835k (or $0.01/share) over a loss of $10.7m (-0.13/share) for the same period last year. Analyst’s consensus expectations were for a loss of $0.02/share. Sales were up 6% to $60.4m. Adjusted EBITDA was $6.7 million, compared to an Adjusted EBITDA loss of ($6.9) million for the same period last year. Service revenues were $54.2 million, compared to $47.0 million. Service and technology revenues were $58.1 million, (compared with $55.0 million).

With subscription numbers, an important metric of performance for a company like Tivo, Tivo added 57,000 new subscribers but total subscriber numbers dropped 1.7% to 4.34m. TiVo-Owned subscriptions increased slightly to 1.7 million from 1.5 million for the same period last year.

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eBay & Stumble Upon: Not such crazy math

With news largely being thrown into the category of: what are they thinking? eBay has confirmed month long rumors by  announcing that it was buying Web 2.0, new media companyStumble Upon for $75m.  Despite the confusion, the logic of the deal may actually make sense. 

deal valuationStumble Upon, which was founded in Calgary, Canada in 2001 is something of a computer-automated web surfing tool married to a community of users.  Either through their website, or browser-integrated buttons, users can ask for a new page and then the website will redirect them (a “stumble”) towards something related.  The sites in the system, however, are not purely random.  Web Publishers, like Metue for example, can buy placements from Stumble Upon that insure a certain number of page views from Stumble Upon users per day; just another form of website marketing. 

It is that paid search component, along with a feature launched in April called “Stumble Thru” which is likely what attracted eBay. StumbleThru lets a user move through the pages of a specific site with the same semi-randomness of full internet stumbling. In other words, they can “stumble” through the listings of eBay auctions, or products at eBay property, Half.com

While the pricing of the deal will raise some eyebrows, and the value of Stumble Upon in the eBay product portfolio will puzzle some, the deal is not completely illogical, nor is the price.  eBay spends a tremendous amount of resources keeping its site and name well publicized around the web.   Stumble Upon will be an asset in those ongoing marketing efforts.

Here’s a breakdown in more detail:
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CBS Buys More New Media: Last.fm acquired

CBS is serious about its online content.  That may not have been clear with last weeks confirmed purchase of news videolog Wallstrip, but with today’s announcement that they were buying UK based Internet radio company Last.fm it certainly is.

cbs last.fmNow, in addition to a sizable investment in IPTV company Joost, and an active content distribution strategy of its own, CBS will add a community driven music network that has more than 15million users spread around more than 200 countries.

In announcing the deal, CBS CEO Les Moonves said “[Last’s] demographics play perfectly to CBS’s goal to attract younger viewers and listeners across our businesses.”  With Joost, Wallstrip and now Last.fm, CBS is clearly trying to build that audience quickly. 

To acquire Last.fm, CBS will pay $280m in cash.  The founders of Last, which was started in 2002, will continue to run Last.fm independently but they will almost certainly be exploring joint efforts with the CBS Radio Division.

In its overall content strategy, it almost seems that CBS is positioning itself to compete Click to Read More

FTC Looking Deeper at Google/DoubleClick

With a purchase price of more than $3b a little regulatory scrutiny was to be expected for the pending DoubleClick and Google deal.  Yesterday the New York Times confirmed such scrutiny was ongoing, and official.  According to the article, the Federal Trade Commission (instead of the Justice Department) was conducting a review and had issued Google a Second Request which is a formal request for answers to a list of detailed questions.

The news or review, regardless of which agency administered it, was expected.  Google stated back in April when the deal was announced that they’d studied the anti-trust issues, expected regulatory scrutiny, and weren’t concerned. 

Given the stakes for the acquisition are high, and also the fact that, in this transaction, you have two companies coming together that each handle a tremendous volume of consumer behavior related information, a Second Request and a detailed review is not a shocker.

DoubleClick, which provides display advertising (video or graphic banners), displays its advertising across a wide range of independent web properties and through “cookies” has the capacity to track which sites a web surfer has visited. Google, in contrast, as the leading search engine, has the capacity to track what web searchers users have made. Google reportedly keeps that date for up to several years as well.  A combined company could pool this information and theoretically that could be problematic, so it warrants a check-up.

Realistically, however much privacy concerns irk and scare consumer watch groups, privacy concerns are not likely to do more than stimulate debate.  Both sites have clear privacy policies and neither is doing anything outside industry practice. Click to Read More

Amazon Gets Brilliant: audiobook publisher bought for undisclosed terms

In a move hinting that Amazon may be interested in offering more than just music at its soon to be launched online music store, Amazon has acquired the nations largest independent audio-book publisher Brilliance Audio.  The terms of the deal weren’t disclosed.

Brilliance, which was founded in the 1980s and is based in Michigan, publishes audio titles from best selling authors ranging from Deeprak Chopra to Ken Follett. Brilliance releases twelve to fifteen audio-books a month in MP3 format on CD or for digital downloads.  Amazon currently offers about 100k audio-book titles, approximately one thousand of which come from Brilliance.

In acquiring Brilliance, Amazon will be in a position to leverage its publishing relationships (as well as its own in- house efforts) to expand the availability of the audio book format to a much larger range of titles. Click to Read More

Feedburner to Google – reports confirm.

All week, rumors have been floating around that Web 2.0 company Feedburner, which helps websites and blogs (including Metue) distribute and track RSS (Really Simple Syndication feeds), is being bought by Google.

A short while ago, Tech Crunch ran a story citing sources close to the deal saying the deal was in fact official with an announcement due shortly.  According to the Tech Crunch article, the parties have signed a binding term sheet and are working through the deal documents.    If that’s accurate, and my research also seems to suggest it is, a closing within the next month is likely.

The deal is reported to be for about $100m in cash, with that paid largely upfront.  For Feedburner and its investors, this will mean a nearly 10x return on investment over the 4 year life of the company. 

For Google, Feedburner and its platform could represent a new frontier in advertising, especially for Google’s AdSense platform.  The logic is that:  when people view news (and blog) content through RSS or email feeds (both of which are increasingly popular) they often do not click-thru to the original article and publishing website. Consequence of that, a large number of advertising impressions are potentially lost for the host site (and it’s ad publisher which is often Google).   In buying Feedburner, Google gains the ability to place advertising directly in to the feed-streams.  With that, Google will be able to take it’s AdSense platform and make it more mobile.  Impressions potentially lost to feeds can be recaptured.  That’s a positive opportunity for Google and blog/website publishers alike.

Wallstrip and CBS: CONFIRMED.

Around May 13, New York based blog Jossip began running with a story that small video-blog/news site Wallstrip was being acquired by CBS.  Information regarding the deal at the time was credible enough to suggest it was highly likely the rumors were dancing around truth, so  I ran with the story here on Metue as well.

Now, a week and a half later, the New York Times has confirmed what many of us already knew: the deal did happen.  While terms weren’t disclosed, CBS did announce the deal and said that Wallstrip would retain its identity.   CBS will work with the creators of Wallstrip to develop Internet programs and information for mobile phones and portable devices.

The Wallstrip content will be added to the portfolio of materials being  produced by CBS’s interactive unit which is actively pursuing an online strategy that includes original content and syndication to web properties including,  AOL, YouTube, and likely, IPTV startup Joost which CBS recently invested in.

The announcement of the deal did not mention specifics regarding the price of the deal. (It was most likely several million dollars below the rumored price of $5m. With $600k in investment and virtually no revenue, it’s more likely the deal topped out at around $2m). Also notably missing in the confirmation of the deal was any information about the fate of Wallstrip’s video host: Lindsay Campbell.

When the first peeps about the deal were circulating almost two weeks ago, most were speculating that Lindsay was a major part of CBS’s interest in the site and purchase  – and that she was only available with the program and not as an independent employee.  Be interesting to see where she ends up. Based on the couple episodes of Wallstrip’s programming I’ve scene, she seems like she could have a successful career in front of the camera. Quoting what I wrote in the previous article on the Wallstrip rumor: "She [comes across as] well educated, credible and articulate, balanced with a style that feels hip, casual and light-hearted enough to appeal to younger audiences in Gen X and Gen Y."



As is often the case in deals involving private companies, especially when the news is still being closely held, there is much speculation regarding terms of a deal, and the finances of the company involved. In my first post on the rumor, before it was confirmed, I noted accurately that reports of Wallstrip having zero revenue were wrong. That’s been further confirmed in the blogs of some of Wallstrip’s investors (here and here). There’s been no information, nor is their likely to be any released, regarding what revenue Wallstrip did or did not have. Characterizing their revenue as “virtually none” was speculative based on the age of the company and the nature of their business. Whatever the actuals, whatever the ROI, I’m sure it’s an exciting time for all at Wallstrip. It’s easy to question deals but speculation takes nothing away from the check they’ve got in their hands for something they built.