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It is always difficult to watch our old favorites slowly fade away. I, for one, am guilty of clinging to my haggard “lucky” shirts for far too long. Similar things happen in the technology world, and unfortunately for this once-revolutionary brand, TiVo Corporation (TIVO - Free Report) looks to be on the fritz.

TiVo Corporation provides digital home entertainment services and solutions. The company offers services which allow viewers to record and control live television, customize viewing preferences, and access television shows.

You likely remember the “TiVo” name as being one of the first in-home, digital DVR systems. The brand was acquired by Rovi Corporation in 2016, and Rovi subsequently adopted the iconic name. The original product helped usher in a new generation for TV consumption, but now the company simply cannot compete with cable companies that are simply doing it all by themselves.

The stock has been on a steady decline since missing earnings estimates in November, and it is currently sporting a Zacks Rank #5 (Strong Sell).

Latest Earnings and Outlook

TiVo most recently reported earnings on November 2. The company reported a GAAP loss of 14 cents per share, down significantly from a profit of 59 cents per share recorded in the year-ago period. Revenues were up about 29% year-over-year, as the acquisition lifted year-over-year comparisons, but the company’s outlook remains questionable.

For one, an ongoing legal dispute with Comcast (CMCSA - Free Report) could put a damper on TiVo’s 2018. In November, U.S. regulators ruled in favor of TiVo’s claim that Comcast’s X1 set-top boxes violated one of its patents, but Comcast has decided to fight this ruling. On top of that, Comcast may not renew its licensing agreement with TiVo this coming July.

Meanwhile, intense competition continues to threaten TiVo. The company faces increasing competition from cable and satellite providers, who offer bundled up DVR service with digital cable in one set-top box at comparable monthly subscription rates and without any upfront costs. TiVo is also challenged by the growth of Chromecast, Roku, and Apple TV.

In response to this competition, TiVo has increased research and development costs in order to find new innovations. But as we know, this could have a significant impact on profitability. Plus, the company relies on sole suppliers for many of its hardware offerings, which creates a lingering supply chain vulnerability concern.

Shares of TiVo have plummeted over 28% over the past year, including a 6% slump within the last four weeks. The Zacks Consensus Estimate for the company’s upcoming fiscal year has lost 12 cents within the last 60 days.

The stock is trading at just 7x forward earnings, but true value stocks are not ones with deteriorating estimate trends. There’s a reason that TiVo has lost so much value recently, and that reason is its crippled business model.

Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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