TiVo 2004 Annual Report Download - page 48

Table of Contents
Index to Financial Statements
Our Certificate of Incorporation, Bylaws, Rights Agreement and Delaware law could discourage a third party from acquiring us and
consequently decrease the market value of our common stock.
We may become the subject of an unsolicited attempted takeover of our company. Although an unsolicited takeover could be in the best interests of our
stockholders, certain provisions of Delaware law, our organizational documents and our Rights Agreement could be impediments to such a takeover.
We are subject to the provisions of Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general, the statute prohibits a
publicly held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. Our Amended and
Restated Certificate of Incorporation and Amended and Restated Bylaws also require that any action required or permitted to be taken by our stockholders
must be effected at a duly called annual or special meeting of the stockholders and may not be effected by a consent in writing. In addition, special meetings
of our stockholders may be called only by a majority of the total number of authorized directors, the chairman of the board, our chief executive officer or the
holders of 50% or more of our common stock. Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws also provide that
directors may be removed only for cause by a vote of a majority of the stockholders and that vacancies on the board of directors created either by resignation,
death, disqualification, removal or by an increase in the size of the board of directors may be filled by a majority of the directors in office, although less than a
quorum. Our Amended and Restated Certificate of Incorporation also provides for a classified board of directors and specifies that the authorized number of
directors may be changed only by resolution of the board of directors.
On January 9, 2001, our board of directors adopted a Rights Agreement. Each share of our common stock has attached to it a right to purchase one one-
hundredth of a share of our Series B Junior Participating Preferred Stock at a price of $60 per one one-hundredth of a preferred share. Subject to limited
exceptions, the rights will become exercisable following the tenth day after a person or group announces the acquisition of 15% or more (or 30.01% or more
in the case of America Online, Inc. and its affiliates and associates until such time as America Online and its affiliates and associates cease to beneficially own
any common shares) of our common stock, and thereby becomes an "acquiring person," or announces commencement of a tender offer or exchange offer, the
consummation of which would result in the ownership by the person or group of 15% or more (or 30.01% or more in the case of America Online and its
affiliates and associates until such time as America Online and its affiliates and associates cease to beneficially own any common shares) of our common
stock. The rights are not exercisable as of April 1, 2005. We will be entitled to redeem the rights at $0.01 per right at any time prior to the time that a person
or group becomes an acquiring person.
These provisions of Delaware law, our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws and our Rights
Agreement could make it more difficult for us to be acquired by another company, even if our acquisition is in the best interests of our stockholders. Any
delay or prevention of a change of control or change in management could cause the market price of our common stock to decline.
In the future, our revenues and operating results may fluctuate significantly, which may adversely affect the market price of our common
stock.
We expect our revenues and operating results to fluctuate significantly due to a number of factors, many of which are outside of our control. Therefore,
you should not rely on period-to-period comparisons of results of operations as an indication of our future performance. It is possible that in some periods our
operating results may fall below the expectations of market analysts and investors. In this event, the market price of our common stock would likely fall.
Factors that may affect our quarterly operating results include:
• demand for TiVo-enabled DVRs and the TiVo service;
• the timing and introduction of new services and features on the TiVo service;
• seasonality and other consumer and advertising trends;
• changes in revenue sharing arrangements with our strategic relationships;
• entering into new or terminating existing strategic partnerships;
• changes in the subsidy payments we make to certain strategic relationships;
• changes in our pricing policies, the pricing policies of our competitors and general pricing trends in the consumer electronics market;
• timing of revenue recognition under our licensing agreements;
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