In my occasional travels in — and conversations with — Silicon Valley, I get to speak to some very smart, very observant people. Not company insiders, but savvy "insiders" of the Tech scene.
I recently mentioned that TiVo’s (OTC: TIVO) management seems to be all over the place, both philosophically and managerially (see Goodbye Tivo). Their business model is suffering, and despite having first mover advantage and the best product in the category, they don’t seem to be able to make a buck.
This is a shame, as TiVo is one of my very favorite toys, and I would be quite distraught if they went bye-bye. It works exceedingly well with my DISH.
In batting this around, we reached a few interesting conclusions: a) TiVo’s recent shifts are not random, and are probably in response to some longer term strategic shifts; 2) something significant was going on with the company.
What might that be?
Our best guess (and this is only a guess, with a smidgen of wishful thinking thrown in) is that TiVo is about to be bought. Their market cap is well under $1/2B, and so for a minor premium — wild guess: $750 million or $8 a share in stock — they get taken out; Sooner rather than later — probably over the next month or so.
A close friend who has no ties to the company thinks the firm that makes the most sense to grab them is Echostar (OTC: DISH).
Echostar competes with Direct TV, which used to use TiVo (you can even see the logo on their DVR page) but are now rolling out their own DVR. TiVo becomes a competitive feature for DISH in their wars with Direct TV, uses TiVo as an added feature for their Users, and of course could sell through to this base and monetize this much faster than TiVo has been able to do. Clearly, a premium sch as this would work well with Echostar’s large installed base.
TiVo, taken out by DISH. You read it here first . . .
UPDATE October 9, 2005 10:46am