TiVo on a roll with Q2 profit

Second straight quarterly rise; also inks deal with EW

TiVo surprised Wall Street on Wednesday by reporting its second straight quarterly profit, though its guidance was below expectations and the stock sunk in after-hours trading, wiping out a big gain from the regular session.

TiVo also said Wednesday that it inked a partnership with Time Warner's Entertainment Weekly. The arrangement allows for broadband-connected TiVos to automatically record the magazine's "What to Watch" TV recommendations.

The deal also adds EW.com to the growing list of TiVo's Internet video partners, including the New York Times, Amazon.com, YouTube and dozens more.

In its fiscal second quarter, TiVo posted $2.9 million in net income. It was only the third time TiVo notched a quarterly profit since the company went public in 1999.

Revenue rose 4% to $65.2 million, but services and technology revenue, which strips out money-losing hardware sales, fell 5% to $53.5 million as TiVo continued to lose customers to cable and satellite TV competitors.

TiVo lost 178,000 subscribers in the quarter, more than the 145,000 it lost in the same quarter last year, and had 3.6 million total subs, down from 4.2 million a year ago.

The troublesome guidance was for just $49 million-$51 million in the current quarter, well shy of the $57 million analysts were predicting, on top of a bigger-than-expected loss forecasted by TiVo management.

TiVo shares, which gained 5.7% and led The Hollywood Reporter Showbiz 50 stock index Wednesday, sunk as much as 7% in after-hours trading.

On a conference call with analysts, CEO Tom Rogers predicted a "substantial award" from EchoStar in the long-running patent dispute. The next stage of the legal wrangling is set for Sept. 4, when a judge could determine whether EchoStar is in contempt of a court order to shut down its DVRs.

EchoStar, which appealed the case to the Supreme Court, also might owe TiVo several hundred million dollars, though specifics are murky and might remain so even after next week's hearing.

Rogers also touted TiVo as the "ultimate television dream machine" for its ability to grab millions of pieces of content off of the Internet for enjoying via TV sets.

Unfortunately for TiVo, such capabilities aren't well known to consumers, so Rogers said to expect radio ads that explain them, and he read the copy to one of those ads to the analysts Wednesday.

Rogers also dismissed concerns of looming competition from so-called network DVRs, saying that they are "beyond the realm of most cable operators' capacities."