11 Pages Posted: 21 Oct 2008
TiVo's valuation is questioned by stock analyst and the case challenges students to use concepts and applications of customer lifetime value to determine whether TiVo's current share prices are appropriate.
On March 5, 2004, Michael Ramsay surveyed the 40 equity-research analysts gathered in his executive conference room in Alviso, California. As cofounder, chairman, and CEO of TiVo, Ramsay was excited about the opportunity presented by the company's first-ever analysts' conference. After a slow start, TiVo's subscriber base had grown rapidly in the past 12 months, and the stock market took notice. TiVo had closed at $ 11.46 the day before, which was 82% above the price it closed at the previous year (see Exhibit 1). As Ramsey thought about the company's products, financial performance, and future plans, he wondered what valuation the analysts would assign to his firm with the new information.
TiVo, Inc. offered television services for digital video recorders (DVRs), a growing consumer-electronics category. Its subscription-based TiVo Service provided consumers with a way to record, watch, and control television. It also gave advertisers, content creators, and television networks a platform for promotions, content delivery, and audience research.
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Keywords: media customer lifetime value valuation
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