(By Balachander) TiVo Inc. (NASDAQ:TIVO) shares fell as much as 6.7 percent in early trade on Thursday a day after the digital-video company posted a quarterly loss as operating expenses jumped nearly 22 percent.
A regulatory filing late Wednesday also showed hedge-fund manager Steve Cohen's SAC Capital raised its stake in TiVo to 5.2 percent or roughly 6.46 million shares.
The company's loss for the second quarter widened to 23 cents per share from 17 cents last year. Revenue rose 7 percent to $65.25 million.
Alviso, California-based TiVo's total subscribers rose by 230,000 in the three months ended July 31, compared with a loss of 33,000 a year earlier.
"TiVo is executing well and it should become more apparent in fiscal 2014," says Brean Murray, Carret & Co analyst Todd Mitchell, who has a "Buy" rating on the stock with a price target of $14.
"Investors can take heart that value is being created, but the bull case for the stock remains the litigation calendar, with Verizon (VZ) going to trial in October, followed by Motorola in the Spring and Cisco in the Fall," the analyst wrote in a note.
For the third quarter, TiVo forecasts a net loss of $27 million to $29 million.
Mitchell looks for 258,000 net adds in fiscal 3Q13, and just over 1 million for the year. The analyst expects growth from Virgin and ONO, offset by net churn at DirecTV.
"Comcast (CMCSA) will expand to new markets, which should help retail O&O gross adds, but we are cautious on the potential here," the analyst wrote. "The delta is Charter, which could put TiVo on a path to 10 million subs, but may take longer than expected to begin ramping."
Comcast, the second-largest cable operator in the U.S., will make the TiVo offering available in Sacramento, Portland, and Denver and other markets this year.
Mitchell sees risk in a later-than-expected Charter (CHTR) rollout. The analyst wrote mix will shift, but heavy R&D and higher legal expenses mean operating losses should stay relatively similar in the second half of the year despite higher expected revenue.
TIVO shares, which have been trading in the 52-week range of $7.75 to $12.37, fell 3.74 percent to trade at $9.01 at 10.33 am ET on Thursday.