Meet Mike Wallace, stock mover.
Shares in TiVo, maker of so-called personal video recorders, jumped 26% Monday after “60 Minutes” aired an upbeat Wallace-hosted segment on PVRs on Sunday evening.
Analysts, some of whom have cited concerns about TiVo’s financial strength, said investors’ renewed enthusiasm for the stock seems to key on heightened expectations about subscriber growth after the CBS program’s broadcast.
Wallace noted in the “60 Minutes” segment that CBS is among TV networks and media groups that have made multimillion-dollar investments in TiVo. But the venerable newsman’s gee-whiz piece on the technology left some observers suggesting the subsequent TiVo stock run-up was unwarranted.
“I wouldn’t want to make any sort of accusation against CBS,” Deutsche Banc Alex Brown analyst Peter Ausnit said as to the net’s possible conflict-of-interest problem in touting TiVo and other PVRs. “But it does strike me that there is a CBS ’60 Minutes’ effect that clearly has incited a lot of small retail investors to put their money into this without necessarily understanding the company’s true business prospects.”
Ausnit has an “underperform” rating on TiVo shares.
Leap of faith
“I really believe in the PVR as a product, but I think it’s a great leap that because PVRs are going to be big that TiVo is going to be a good stock to invest in,” Ausnit said. “TiVo has a corner on this space but hasn’t demonstrated its ability to meet projections or presented a path toward profitability. In fact, it continues to burn cash at an incredible rate.”
San Jose-based TiVo is considered the leading maker of PVRs, with ReplayTV and UltimateTV also active in the sector. PVRs let TV viewers record large amounts of programming each week without the use of videotape, allow them to fast-forward over advertisements while watching shows and in some cases do instant replays while still recording.
Notably, the TiVo box — unlike some others — doesn’t feature a 30-second “skip” button to easily speed through commercials. That’s considered a nod to its network backers, who fear the loss of advertising support through the spread of PVR technology.
TiVo stock, which has shed 86% of its value over the past year, rose $1.05 on Monday to close at $5.09 after trading more than triple the normal volume in the Nasdaq-listed shares.
In the “60 Minutes” segment, Forrester Research analyst Josh Bernoff was among those offering bullish assessments of growth prospects for PVRs. Though only about 100,000 such devices have been sold to date, Bernoff estimated that more than 1 million such units will be in use within another year, and that half of all U.S. households will own a TiVo or some other PVR within five years.
“People may have looked at that and said, ‘Hey, maybe this is a stock I want to own after all,’ ” Sutro analyst David Miller said.
Sutro reiterated Friday’s “buy” recommendation on TiVo. “There’s something of a war going on right now,” Miller mused of the lack of analyst consensus on TiVo.
Diminished hopes for the quick spread of PVRs caused ReplayTV to cancel its initial public offering in November and agree two months later to a takeover by audio device company Sonicblue. The Mountain View-based company also has refocused from selling PVRs to developing related software.
UltimateTV, a unit of Redmond, Wash.-based software giant Microsoft, is gearing up for the rollout of its PVR product. It hopes to catch consumer notice by offering the ability to record two programs airing at the same time, something not possible on TiVo or ReplayTV machines.
(Marc Graser and Scott Hettrick contributed to this report.)