TiVo stock follows familiar path

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TiVo might be up to its usual tricks: announce a cool new initiative, stock spikes, then gradually sells off in the subsequent days until it's around the same price it was before the new development.

This time around, the cool new thing was a partnership with Amazon.com to deliver movies-on-demand to TV sets over the Internet. It has the potential to be remarkably engaging --just like recorded shows, home movies and select Internet content will show up on TiVo users' "Now Playing" list, so will it be with movies they want to see.

The Amazon partnership, along with other recent moves, "make it clear that TiVo is not just a DVR but a living room media hub," enthused Citigroup analyst Tony Wible, who reiterated his buy rating and $11 price target on the stock.

TiVo shares, which gained 9% Wednesday to $5.97 after the Amazon announcement, closed at $5.88 on Monday.

The TiVo-Amazon deal, Wible said, "could be a major game changer for TiVo and movie download services by providing an economical means for consumers to get PC content to the living room and it supports our thesis that DVRs will play a key role in the integration of the consumer's living room."

Perhaps, but how might that help TiVo's long-suffering shares, other analysts ask?

"TiVo can offer a way through the thicket of content license issues that have kept broadband video largely confined to the PC/iPod," FBR Research analyst Brian Coyne said. Nevertheless, the analyst stuck to his $6 price target on shares, suggesting limited upside potential over the next 12 months.

"We think profitable growth will be challenging," Coyne said. "Still, the company's near-term fundamentals appear to be improving."

On yet another hand, Oppenheimer analyst Alan Bezoza is downright bearish on TiVo shares, rating them a "sell" and setting a $5 price target.

The Amazon relationship, Bezoza acknowledges, "is clearly a step forward in the new digital world aimed at delivering any video content, at any time, to any device, in any place."

But he worries that little TiVo won't be able to compete effectively against behemoths like Apple, Microsoft, Cisco Systems and Sony.

The analyst also notes the usual conundrum about TiVo: While consumers love it, too many of them are happy to forego it in favor of cheaper, generic DVRs from their cable and satellite service providers.
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