TiVo: Going, Going…Pause
TiVo: Going, Going…Pause: Businessweek is out with an article on TiVo that suggests perhaps they will be bought by the TV giants and studios only to scrap the company, take the cash and patents on hand and prevent TiVo from pursuing a disruptive Net strategy.
“The logic? TiVo’s market cap is only $336 million. Take away the $150 million of cash on hand, and the company’s valued at less than $200 million. TiVo’s sagging stock has jumped 16% since Feb. 14 on hopes that a media or electronics power — Sony (SNE ), Time Warner (TWX ), even Apple (AAPL ) — will buy the money-losing TiVo for its brand and software smarts.
If TiVo’s Net strategy takes off, the company still has a chance as a stand-alone player. That’s a sobering thought for the TV giants and studios. In fact, given the disruptive potential of TiVo, maybe one of the titans will spend a few hundred million to buy it after all — if only to kill it.”
I doubt it. There were plenty of dotcom companies that had more cash than market cap back in the implosion. The problem with a small cap stock is that once you start actually buying shares on the open market, prior to building a significant position, you manage to bump the price up and end up paying more than the current stock price. It’s like a frenzy once the rumors are out and could end up costing you twice as much money or more. Certainly someone might be able to work out a deal privately with TiVo but the current executives probably do feel their company is worth more and I can’t imagine they’d want to sell the company only to see it shut down.
Second, it’s expensive to shut a company down. You have to analyze contracts and fire people and pay severance and deal with lawsuits and the such.
Third, killing TiVo would be a pretty unpopular thing to do generating lots of bad PR — ill will and what not.
Fourth, TiVo is not the only net strategy out there today. Microsoft, Akimbo, Movielink and Cinema Now — not to mention the big coming wave of the Bells and their IPTV efforts. You won’t kill internet distributed content by killing TiVo.