That may sound like what video recorders were doing a couple of decades ago but, to be fair, TiVo’s technology is different. It uses not tape but computer hard-disk memory, which means you can watch and rewind even as you’re recording. If that doesn’t sound spectacular, you’re out of touch with the market. Recently the granting of TiVo’s patent, a fairly routine event, nevertheless sent shares soaring 40 percent.
Sure, “better-than-expected” quarterly results also had something to do with the rise. But how impressive were they? Revenue was a paltry $3.2 million, and the company’s loss was $44 million (a big improvement over the prior quarter). For 2001 analysts expect yearly revenues of just under $21 million. And yet TiVo’s market capitalization is a whopping $368 million. That’s 58 times its expected sales, compared to an S&P 500 average of 1.8.
What keeps TiVo floating along? In a word, promise. There is a general sense out there that television is in the middle of some kind of grand evolution, and that TiVo will remain in the vanguard of whatever changes are to come. Never mind that TiVo’s service has just over 200,000 customers, far fewer than this technology’s boosters had predicted. We’ll see how long it takes investors to tire of this story.
