Tuesday, March 15, 2005


On hearing the rumor of a take-out of TIVO, I immediately thought that $6 a share would be better than a stick in the eye after having ridden the stock down to $3. I am pleased to learn that the deal is not a take-over. Details are sketchy but TIVO and Comcast have agreed to terms whereby TIVO services will be available on the Comcast system. Comcast has already agreed to buy a billion dollars worth of set-top boxes from Motorola. Apparently Comcast customers will be given the option to choose boxes at different price points. This could mean millions of dollars in revenue to TIVO.

Earlier negotiations failed when Comcast tried to make a deal on the cheap. TIVO charges retail customers north of $10 per month and collects only a few dollars per subscriber through Directv. Comcast wanted to pay less than $2 per month. The fact that a Texas judge allowed a lawsuit by TIVO against EchoStar to go forward may have moved the deal with Comcast forward.

The implications are that TIVO has the patents to enforce and that Comcast had rather strike a deal than fight it out in court. Now that the largest cable company is on board, one can speculate that others might follow. DirectTV has designed its own system. The new systems by Motorola, Scientific Atlanta and the DirectTV subsidiary typically offer advanced features but they also tend to avoid offering some of the basic features offered by TIVO. I will read the technology specific blogs over the next days and weeks to learn more. I do not pretend to know the details that make TIVO work. Market action has made it clear that management believes they have a viable long-term product; one that can withstand the competition from several 800 pound gorillas. Today's deal confirms that TIVO is a long-term player. The service through Comcast will not be available until 2006.

There are several technologies that are ready to fly! The adoption rates are expected to soar in late 2005 or in 2006. One must always remember that the stock market discounts the future by 6 to 12 months. 2006 is going to be a big year for technology. For example, touch screen ordering systems produce labor savings and increased sales for many businesses.

The labor market is still stronger than it appears. Millions of folks are building "internet businesses". They may not be making much money but they are working hard and some will become wealthy. The latest Fed reports show that Americans have more wealth than ever before. Soon, it will seem foolish not to own a TIVO!