Daily Commentary From Schaeffer's Investment Research Features: TiVo.

Business Editors

CINCINNATI--(BUSINESS WIRE)--Nov. 19, 2003

Today's Daily Commentary From SIR features: TiVo (Nasdaq:TIVO)

Daily Commentaries are market-based reports that provide insight and analysis from a unique and unbiased perspective. For additional information about this report or to have it delivered to you via email everyday click on the following link : http://www.schaeffersresearch.com/addinfo .

Tomorrow after the market close, TiVo (Nasdaq:TIVO) will make known its third-quarter earning figures. The current buzz on the Street is for the company to post a bottom-line loss of 16 cents per share on revenue of $17 million.

The company's revenue comes from three different sources. It receives income from providing the TiVo Service to consumers and from providing advertising and research services to media and consumer product marketers. It receives licensing and engineering professional services revenue from companies that create products providing digital video recorder (DVR) functionality. The company also receives revenue from the sale of DVR hardware.

Technically speaking, the shares have been trading in a reasonable narrow range ($3.00-$15.00) since late 2000 and following their fall from grace at almost $79 per share. Late last summer the security was struggling to hold support at its 20-week moving average, but the nail in the coffin was provided by rumors that the company's services would be dropped by Direct TV. The news was sufficient to lead to a failure at its 20-week and provided the catalyst for the ultimate bearish cross of the 20-week beneath the 10-week moving average. Since then, the 20-week trendline has capped all price action in the shares.

Click the following link to see the Weekly Chart of TIVO since December 2001 with 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=8916 .

The stock is not widely followed by the options crowd, as the are just a little more than 21,000 total contracts of open interest in the front three months. So, it's just somewhat disconcerting that the Schaeffer's put/call open interest ratio has been declining as the earnings release approaches.

What could be more telling is the activity by short sellers and analysts' views on the shares. Just over the most recent reporting period, the number of TIVO shares sold short grew by six percent to almost 9.3 million shares, a historically high reading. This accumulation of shorted shares yields a reasonably hefty 4.03 days to cover. Additionally, this short position represents more than 27 percent of the float.

The company is not well covered by the Street, as only 10 analysts chose to offer up opinions. Currently, there are six "buy" or better, three "hold" and one "sell" rating on the shares.

As far as the earnings history goes, the company has yet to show a profit. Over the past four quarters the company has reported -0.23 (3Q), -0.25 (4Q),-0.12 (1Q) and minus 0.07 (2Q) in the most recent quarter. Over this cycle, the company has delivered upside surprises of 25.80 percent, 21.90 percent, 45.50 percent and 46.20 percent, respectively.

Despite the fact that the shares have been underperforming, there seems to be enough negative sentiment on the stock that another in the string of upside surprises may ignite a rally in the stock. It's a risky trade if you chose to take it.