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"The Bearish Case on TiVO": A one act play.


"There I was, minding my own business and quietly happy being long TIVO..."


I can't take credit around the Ville for being the first one to mention it but I think the most important lesson around here of late has been "understand the other side of the trade".

In the interest of sharing the manner you might go about being exposed to the thoughts of those who disagree with you (in my case I went about it largely by minding my own business, then getting attacked) I present the below IM Conversation, based on a chat I had earlier today.

Since "empathy" is an important part of understanding the other side of your trades, I've added stage directions. This should help Minyans channel their inner-Brando's and get in character.

Print it out and run through it with the kids in the office... be sure to take a turn in each role!

Minyan Meanie (with a tone of overt politeness providing a scrim of coverage for his "You are a moron, Macke" intent): Jeff Macke? Minyan Meanie here. Toddo's friend.

JeffMacke (Amiably): Yo!

Minyan Meanie (Opting to "dive right in", now that introductions have been made) : TIVO (TIVO) is a short. If you are so negative about the NDS Group's (NNDS) DVRs then why stay long? The analyst at our shop thinks that you will see Tivo boxes taken off the shelf for DirecTV's (DTV) cheaper models when they come out.

JeffMacke ("Ummm... Todd's friend, eh?"): Tivo has no risk to zero. Which, for a stock that volatile, is the only reason I'd personally be short it.

Minyan Meanie (Demonstrating a Todd-O-esque attention span, supporting his claim to be Todd-O's friend): Otherwise any suggestions for barbs for Collins? I am slated to go to the Orioles game with him tomorrow.

JeffMacke (A helpful helper who enjoys helping) : I find it best to play it by ear with Collins. When he's uppity, just hammer anything you can think of until he mopes. Then tossle his hair a bit in a friendly way. Repeat as needed.

Scientific Atlantic (SFA) or Motorola (MOT) are doing the set-top box hardware for the MSO's in any circumstance, most likely. But they are most likely losing the software kicker.

Minyan Meanie (pausing to jot down Collins instructions) : Yeah but with $9 in cash, expected growth in revs as percent overseas, and if Adelphia goes to Time Warner (TWX)... it would all bode well (for SFA).

JeffMacke (Making a memo reminding himself to ask Todd-O to keep his IM name secret): I don't think SFA is a bad co. There just aren't many players in set-top boxes. Whatever growth there is in the industry is assumed to be largely ear-marked for SFA.

That success has to be at least partially in SFA's stock. (esp with how much MOTs boxes have [vulgar term meaning "not great"])ed.

Minyan Meanie (Awestruck): True. In terms of TIVO the concern is their ability to generate FCF which is more appropriate to look at vs profitability (given it's stuffed w/ amortized lifetime sub revs). I just think money better spent elsewhere.

FYI - my analyst is checking into the August 1st NDS Group (NNDS) launch.

JeffMacke (Cunningly): Lemme know what he hears. You mind if I post this IM as a mail baggish column? You can pick an alias!

Minyan Meanie (with Brutish pride): Minyan Meanie!

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Position in TIVO

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