TiVo
(TIVO,
news,
msgs),
a small company that's been in business
barely 11 years, is behind big changes in
Americans' relationship to their TVs. It's
also rattling the mighty media and
advertising industries.
That's because, with a TiVo digital video
recorder (DVR), prime time can be anytime,
and commercials are easily skipped.
The Alviso, Calif., company has about 4
million subscribers who own TiVo-branded
DVRs and pay the company about $12 a month
to use them to record TV shows that can be
viewed later.
TiVo also gets monthly fees from DirecTV
Group (DTV,
news,
msgs),
which offers TiVo-branded DVRs to
subscribers to its satellite TV services.
More than half of TiVo's subscriber base was
acquired through its decade-old marketing
agreement with DirecTV.
TiVo is also up to its eyeballs in
efforts to deliver content over the Internet
and into consumers' living rooms.
The company in March announced a deal
that will allow customers to download movies
from Blockbuster
(BBI,
news,
msgs).
It struck earlier deals to provide access to
movies and TV shows distributed over the
Internet from Netflix
(NFLX,
news,
msgs)
and Amazon.com
(AMZN,
news,
msgs).
TiVo and DirecTV are planning the launch
of a broadband-enabled high-definition DVR
that will be available to DirecTV
subscribers later this year. TiVo also has
distribution deals with two of the nation's
biggest cable TV providers -- Comcast
(CMCSA,
news,
msgs)
and Cox Communications.
The nationwide transition to digital TV
signals from analog, slated to begin in
June, could be a boon for DVR providers like
TiVo. That's because people who use
videocassette recorders (VCRs) to record
over-the-air or cable channels will find
their devices less useful after analog
transmissions are shut off.
At least 70% of U.S. households with a TV
also have a VCR, according to research group
Nielsen. Estimates of the
percentage of households with DVRs range
from under 25% to about 33%.
Stock Chart (Year)
TiVo
TiVo is also encroaching on Nielsen's turf;
it has developed an audience research tool
designed to find patterns in viewers'
commercial-watching behavior. It plans to
begin peddling to advertisers
second-by-second details about what its
subscribers watch, and don't watch, in each
of the top 20 U.S. television markets, Dow
Jones reported.
TiVo, which in January reported its first
profitable year, appears on a monthly list
of stocks created with the MSN
Money StockScouter tool, which since
2001 has helped investors assess a stock's
likelihood of outperforming the broad
market.
Investment research firm Gradient
Analytics uses StockScouter to create
daily and monthly stock lists. MSN Money
columnist Jon
Markman collaborated with the company to
devise strategies for putting
the tool to work.
One of Markman's strategies involves
investing an equal amount of money in each
of the stocks in the computer-generated
portfolio at the start of the month, selling
them at the end of the month, then beginning
the process again the next month. An
investor who followed Markman's strategy
since it was launched would have realized a
gain of 150% through March, according to
Gradient Analytics.
The chart at the bottom of this page
represents the benchmark StockScouter
portfolio for May.
Cheaper batteries
Energizer
Holdings (ENR,
news,
msgs)
appears on the May list. The 9-year-old
company is one of the world's biggest makers
of batteries and flashlights, sold under the
Energizer and Eveready brands.
The St. Louis company acquired the
Schick-Wilkinson Sword shaving products
business from Pfizer
(PFE,
news,
msgs)
six years ago and in 2007 bought Playtex
Products, a maker of tampons, baby wipes,
Hawaiian Tropic sunscreen and other
products.
Diversification beyond batteries has made
Energizer more like a mini-version of its
toughest rival, Procter
& Gamble (PG,
news,
msgs),
the owner of dozens of brands, including
Duracell, Gillette, Tampax and Tide.
Belt-cinching consumers are trading down
to cheaper batteries. Energizer, which does
business in 160 countries, cited the
dollar's strength and weak battery sales in
reporting that first-quarter revenue fell
7%. Cost cuts allowed the company to exceed
Wall Street expectations.
The moribund economy should keep the
company under pressure throughout 2009, said
UBS analyst Nik Modi on
April 20 as he downgraded the stock to
"sell" from "neutral."
Modi was urging shareholders to take profits
from the stock's recent run-up. The analyst
raised his 12-month price target by $13 to
$53 a share.
In the know
If the beleaguered news business has a sweet
spot, Thomson
Reuters (TRIN,
news,
msgs)
just might be in middle of it, according to
the Financial Times. The London newspaper
reports that wire services are expanding and
hiring journalists as newspapers continue to
shrink.
The New York company sells information to
businesses professionals in media, legal
services, finance, health care and science.
It also provides information and trading
services to buy-side and sell-side customers
engaged in such markets as energy,
commodities, equities, foreign exchange,
fixed-income and exchange-traded
instruments.
The banking crisis is hurting Thomson
Reuters, as companies in the financial
sector have pared their information budgets
by 20%, the FT reported. But the crisis
could exact a bigger toll on rival Bloomberg,
which is more reliant on hedge funds and
other fixed-income investors and less
competitive in the forex and commodities
markets.
Analyst Jeffrey Fan at UBS thinks bank
spending on market data will continue to
contract, a trend that would hurt both
companies. But Fan, who has a
"sell" rating on Thomson Reuters,
thinks the recent decision by privately held
Bloomberg to boost its head count this year
by 950, including 100 journalists, should
allow it to improve its offerings and expand
its market share.
Quality-of-life megatrends
National
Semiconductor (NSM,
news,
msgs)
has benefited from recent optimism that the
global slide in chip demand has bottomed
out. The stock is up 22% over the past three
months.
Sluggish demand forced the Silicon Valley
company in March to slash its work force by
26%, one of the chip sector's most dire
responses to the recession.
The 50-year-old company is trying to control
costs as it shifts focus away from a broad
line of low-cost chips for everything from
cell phones to cars and toward leading-edge
products for energy management and other
applications.
Refocusing the company has been a
priority of CEO Brian Halla since he took
over the company in 1996. National
Semiconductor spun off its logic, memory and
other commodity-type components as a
separate company, Fairchild
Semiconductor (FCS,
news,
msgs),
in 1996 to put greater emphasis on high-end
analog chips, the San Jose Mercury News
reported.
Halla wants the company to focus on what
he calls "emerging qualify-of-life
megatrends, " such as improved solar
panels, innovative medical diagnostics and
sensors that can spot terrorists trying to
sneak themselves or weapons of mass
destruction into the country.
StockScouter depends on advanced
mathematics, software and an innovative mix
of measurements and historical testing to
forecast the short- and long-term outlook
for all U.S. companies that have traded on
the three major exchanges for at least the
past six months. The analytical tools are
applied to score stocks on fundamental,
valuation, technical and ownership
components.
This score is combined with each
company's StockScouter rating to come up
with the list in the above chart. Only
stocks with a final closing price above $3
are eligible for the list.
Click
here for more on how to put StockScouter
to work for you.
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