TIVO - An embarrassing story

[abk33139]

So, all of you know that I'm new to trading and so I'm humbly admitting a mistake here and asking for some help. As good as my SIRI pick was, my TIVO pick was a terrible choice. I got in right before it plummeted. I'd be happy to get out without too much of a loss, but it doesn't seem to be recovering much. I bought it without doing my research (I'm learning, though) and the day after I bought it, it went way down. I didn't invest too much, so it's not too painful, but still - I hate to lose money, even though I know that's part of the reality of trading. So, here's my question. Does anyone who does their nifty research graphs see any hope that it will go back up anywhere near the $5.80/share I paid, or should I just dump it as a lesson learned? Right now I'm down at 13% and wondering if I should just take my loss, my lesson learned, and move on.

Thanks for all the help that this board has offered. I really appreciate it.

Alison

[mrmarket]

First of all, a stock doesn't know how much you paid for it and its future performance is really independent of same. So what you paid for it really doesn't matter.

Second, even though a stock looks like it is a company with a great idea and a great product, one always needs to look at its valuation. Sure, I'd love to buy a fancy new sports car, but I never want to pay too much for it.

It's best to buy a great idea or a great product while it is still reasonably priced. That's the best of both worlds. There are a lot of fish in the sea, don't get too hung up on any one.

[jiesen]

My opinion- sell TIVO and buy MCRI (or any other $$MM pick still within 10% of his entry... SPF, FLIR, etc). You'll be much better off for it, and you can roll the gains into another $$MM pick when it hits the 15% target along with the rest of us. By the way, in addition to your 401k, you should also put your $3000 max into a Roth IRA if you haven't already this year, and you can buy another couple $$MM picks to spread your risk out more. Give yourself a few more years of studying up, and let Ernie's system -it works!- show you what stocks are best to choose, and more likely to give you a profit. Add a couple new positions each year. When you think you have the hang of it, then go and make a few more picks on your own again... hopefully you can avoid picking another TIVO then. Count yourself lucky that you picked SIRI to counterbalance. I sure wasn't so lucky when I started making my picks in 2000! And also remember that even the best pick lemons sometimes, (look at BEL) so don't worry about TIVO, you may still be right about it. But like I said, you need time to learn, and that'll be one lesson you won't soon forget.

Take this for what it's worth- not much, since it's all just my opinion!!!! I know very little about TIVO, but I know even one of the richest dudes ever, Paul Allen, got burned very badly by it, so don't think you're in poor company with that pick...

[abk33139]

Thanks for the input. I think I will sell today and take my loss.

By the way, I did buy MCRI and am glad its rebounding.

Alison

[jiesen]

By the way, in addition to your 401k, you should also put your $3000 max into a Roth IRA if you haven't already this year,

Actually this is an exception to what I said about just my opinion. If you ask anybody about the Roth, they'll say the same thing. Max out your Roth IRA by all means! Do this before you buy a single Xmas decoration. I'm serious about that. If you completely ignore everything else I said, but did just that, I'd be ecstatic.

Am I right, guys?

[MEA_1956]

10-4 ==== little buddy, Heavy on the Roth ;;; Come Back

[scifos]

First of all, a stock doesn't know how much you paid for it and its future performance is really independent of same. So what you paid for it really doesn't matter.

Exactly, you just need to decide if it is going to go up or down from its current price, don't consider what you paid for it.

[stenzrob]

RE: A stock doesn't know (or care)

First of all, a stock doesn't know how much you paid for it and its future performance is really independent of same. So what you paid for it really doesn't matter.

I agree wholeheartedly with this concept, but I find it inconsistent with other statements made by his HUGEness.

So, if a stock is up, say, 15% from a purchase point, but still meets all the criteria of valuation, earnings growth, R2, etc. that one would use to select it to buy, then shouldn't one continue to hold it because it should be good for another 15%?

Conversely, if one's criteria for a buy are violated by a stock being held in the portfolio - for example, lousy earnings indicating slowing or even negative growth result in both an adverse change in stock valuation and in share price direction, shouldn't one sell that position because it no longer meets the buy criteria, regardless of whether the position is up or down?

Remember, each position that one stubbornly holds is another position that one cannot buy.

[mrmarket]

I agree wholeheartedly with this concept, but I find it inconsistent with other statements made by his HUGEness.

So, if a stock is up, say, 15% from a purchase point, but still meets all the criteria of valuation, earnings growth, R2, etc. that one would use to select it to buy, then shouldn't one continue to hold it because it should be good for another 15%?

Conversely, if one's criteria for a buy are violated by a stock being held in the portfolio - for example, lousy earnings indicating slowing or even negative growth result in both an adverse change in stock valuation and in share price direction, shouldn't one sell that position because it no longer meets the buy criteria, regardless of whether the position is up or down?

Remember, each position that one stubbornly holds is another position that one cannot buy.

Everthing you say is true...but remember this. You say tomayto and I say tomahto.

[stenzrob]

Everthing you say is true...but remember this. You say tomayto and I say tomahto.

As long as you don't throw those tomahtoes at me, then we're fine!

[Dave]

Alison,

I feel your Tivo pain, as I invested in SonicBlue for similar reasons. They were the makers of ReplayTV and Rio. I knew there was significant risk involved with investing in a company that is heavy in debt and struggling to build sales and product recognition. I ended up with a much lighter loss than I could have, as the company BKed.

Now, my opionions on Tivo:

Tivo, a DVR, is a great idea and product. Tivo has by far the best name recognition in this area, and probably the best product. Their problem is that they have, and continue, to spend millions of dollars on advertising and PR, while garnering small amounts of subscribers. These subscribers would normally pay around $12.00/month for the Tivo service, which is basically just a guide that allows you to program the device. The Tivo unit is useless without the guide, and I think it actually will not function at all. That being said, when you take Tivo's current subscriber base, somewhere around 1 million, you get ~12mill/month in gross revenue, not counting the hardware, which they basically sell at cost to get the subs. That seems pretty good. 36mill/quarter, 144mill/year in gross revenues from subs.

Unfortunately it does not pan out so well when you actually look at where Tivo's subs come from. The bulk of Tivo's subs come from a contract with DirecTV. a DTV subscriber can get a Tivo receiver for free, and sub to the service for $5/month instead of the usual $12. This $5 is then split between Tivo and DTV, so Tivo is not getting much here. Why did they ink this contract then, when they get nothing from hardware sales and only a pittance from the service fee? Basically they were desperate. Now the question is what are they going to do when DTV brings in a DVR made by NDS? NDS, which is owned by the same folks that own DTV, also makes DTV's access cards and supplies their European version with a DVR. Suddenly you have Tivo being replaced by NDS.

This apparently does not look good for Tivo, but keep in mind that Tivo has a very loyal subscriber base. They offer a much more robust product than NDS or other integrated DVRs, such as Dishnet's. Personally I think Tivo will do its best just concentrating on a small market with a superior product. DVRs WILL take off like they have been predicted to do for the past 3 years, but 90% or more of them will be dummed-down integrated DVRs in cable and sat boxes. Most cable companies have already released their own product, so that promise of the huge cable deal is not going to happen at Tivo.

So what is left for Tivo? Well, they are either going to have to drastically scale back costs and be a profitable, but small, company, or their debt is going to crush them. I feel if they make a superior product, people will pay for it. Similar to the iPod. There will never be 20million Tivos out there, but the million or two that WILL be out there will make Tivo some decent earnings.

How much is the stock worth in a year? I will look at it more closely and post again tomorrow, as it is now time to head home!

-Dave

[tokyojoeskid]

Dave today was a good day for UTSI now can we just get over the $20 hump and continue to 24-25, knowing this stock someone will downgrade it tomm or reject it because it gets too much business from the Far east.

TjK

[abk33139]

Dave - thanks for the informative post. I'm glad I dumped the stock yesterday, as it went down another 3.68% today. The loss I took didn't hurt as much as if I'd held on to it hoping it would rebound, which it hasn't. Lesson learned!

Thank you,
Alison

[Dave]

Tjk,

Things are starting to look very good for UTSI. I could go into great detail on that one, but since this is a Tivo thread I will restrain myself! That being said, I don't expect anything huge in PPS until Q1 2005.

Alison,

If you are looking for a company that has an excellent product that will catch on big in the future, I would lean toward the likes of Sirius Satellite Radio (SIRI). There is little competition here, and companies can't just shoot up some satellites to compete. If I was not so heavily vested in UTSI right now, I would be holding a good amount of SIRI in my higher risk/reward fund.

If you are still at all interested in Tivo, I could give you a fair value of the stock based on them being able to change their business plan a bit.

Dave

[abk33139]

Dave - I would be interested in a fair market price for TIVO, but only if its not a lot of trouble. I doubt I'd go back into it unless it dips way down and I can see there's a possibililty of it moving back up.

I guess you haven't read my SIRI thread. I am heavily invested in SIRI (heavy for my puny little portfolio that I'm working with). Right now I'm up 65%, so I'm a happy camper with that one.

I am looking for something new to sink a few bucks in. Do you think its too late to get in on UTSI?

Thanks again,
Alison