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TiVo subs surfacing

Record 90,000 customers added in 2nd qtr.

TiVo may not quite be ready for primetime, but it’s getting closer.

The digital video recording provider chalked up a record quarter of subscription gains as additions doubled to 90,000 in the second quarter of 2003 over last year.

Announcing its financial and operating results for the three months ended July 31, TiVo touted strong momentum from its DirecTV-TiVo combo box. Company said it added 34,000 standalone subscriptions in the quarter, a 60% gain over the same period a year ago, along with 56,000 DirecTV subs.

“We just doubled sub growth in the first half, we’ll triple in the second half, and we expect to roll past 1 million subs during the holiday season,” said CEO Mike Ramsay, citing a bull market for his company’s still thinly penetrated technology.

Company said it expects to top 1 million new subs this coming holiday season, driven by expected demand for its new DVD/DVR integrated products as well as strong growth from DirecTV.

Revenues for the quarter were $26.7 million, with a net loss of $4.4 million. More than half were derived from unit sales and subscriber fees as well as income from marketing partner DirecTV and advertisers. The balance comes from technology licensing fees and servicing. Company also recorded an $11 million gain from a licensing deal with Sony.

TiVo counts 793,000 subscriptions, some 326,000 of them from DirecTV. Company reported $103 million in net revenues for the 12 months ended July 31.

Thanks to its better-than-expected showing in the first half of the year, company on Thursday raised its guidance for the full year. Looking forward, TiVo upped its fiscal 2004 sub growth target to between 550,000 and 650,000 and anticipates revenue for the fiscal year ending Jan. 31 at $65 million-$70 million. Company says it’s on track to add 130,000-160,000 subscribers in the next three months.

Company also said it signed new advertising contracts with Chrysler, General Motors and Club Med during the quarter.

‘Sex’ sells

TiVo, which enjoys strong word of mouth and almost cult status thanks to a recent guest appearance on HBO’s “Sex and the City,” is still struggling to crack the mass market before rivals steal its revolutionary thunder. Mindful that its primary challenge is its lack of a successful cable distribution strategy, TiVo said it is negotiating with cable MSOs to craft partnerships similar to its tie-up with DirecTV to market integrated set-top and DVR boxes.

“We’re confident that TiVo has a major role to play in cable industry,” Ramsay told analysts on a Thursday evening conference call, noting that the company got a major spike in subscriptions after DirecTV rolled out their joint RCA box.

TiVo’s business model, which depends on monthly subscriber fees as well as box sales and licensing technology, is still a work in progress. Company says it is developing new revenue streams out of its proprietary viewing information so it can sell market research.