(1 September 2007 5:00 pm)

MUMBAI: Tivo, which creates services for digital video recorders (DVRs) in the US, has reported financial results for the second quarter ended 31 July.

It suffered a net loss of $17.7 million, including a standard definition product inventory related write-down of $11.2 million.

Service and technology revenues were $56.5 million in the second quarter. Tivo CEO Tom Rogers says, "We made significant progress over the past six months on several areas of our business that we believe will positively impact the growth prospects of Tivo.

"During the quarter, we rolled out a new popularly priced Tivo HD box. In addition, our Tivo on Comcast service is progressing well and importantly, Comcast has agreed to fund
substantial development work to bring the TiVo service on Comcast to additional platforms, including Scientific Atlanta set top boxes."

Tivo recently launched ashigh definition (HD) unit. This new product will enable Tivo to participate in the high definition (HD) wave in retail, where there has been an accelerated movement away from standard definition technology to a greater focus on high definition television sales.

Rogers adds, "Retailers such as Best Buy and Circuit City are enthusiastic about our new HD product and are embracing TiVo in new and unique ways including better merchandising, improved floor placement, demos, and more aggressive positioning of Tivo as a centerpiece to an HD media center.

"Early indications are that retailer orders are very promising, which we believe will lead to sequential improvements in Tivo-Owned gross additions in Q3. The new Tivo HD product was launched with virtually no hardware subsidy through the direct channel and in retail with a lower subsidy compared to the standard definition product.

"This is another positive step for TiVo's marketing strategy to redirect investment from hardware subsidies towards a more advertising-centric approach."

On the mass distribution side of the business, the Tivo on Comcast service continues to progress well. Comcast stated, "We will commence the TiVo rollout process shortly, which will continue rolling out throughout the fall in Comcast's New England Division including metro Boston, Southeast Massachusetts and New Hampshire."

Comcast has just agreed to fund significant additional development work to bring the Tivo service to other Comcast platforms, including Scientific Atlanta set top boxes.

Tivo continues to expect that a shift away from hardware subsidies towards a more advertising-centric marketing approach will continue to have a positive impact on the company's financial profile as compared to last year, as it has over the past two quarters.

Rogers continued, "Increased consumer demand for high definition products, which accelerated retailers' movement toward high definition sales, resulted in a continution of the tepid trend in standard definition sales.

"Consequently, we ended the quarter with higher than anticipated inventory levels of long-lead time components and parts related to our standard definition product. Because of the continuing HD trend, it was prudent to reserve against this long-lead time inventory. It is noteworthy that the analogue basic cable market as well as homes currently not looking
to upgrade to high definition television present an opportunity for us as the Tivo standard definition product is the only option for the these approximately 30 million homes where DVRs are desirable.

"We are not abandoning this space, but have to re-focus our marketing efforts to reach this consumer since retailers are now fully focused on HD."

Service and technology revenues increased 7 per cent to $56.5 million, compared with $52.8 million for the same period last year. Service revenues were $53.4 million, compared to the year ago quarter when service revenues were
$49.4 million. Technology revenues were $3.1 million, which was lower than expected due to timing of development work related primarily to DirecTV and international opportunities.