TiVo 2005 Annual Report Download - page 34

Table of Contents
• 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;
• loss of subscriptions to the TiVo service; and
• general economic conditions.
Because our expenses precede associated revenues, unanticipated shortfalls in revenues could adversely affect our results of operations for any given
period and cause the market price of our common stock to fall.
Seasonal trends may cause our quarterly operating results to fluctuate and our inability to forecast these trends may adversely affect the
market price of our common stock.
Consumer electronic product sales have traditionally been much higher during the holiday shopping season than during other times of the year.
Although predicting consumer demand for our products is very difficult, we have experienced that sales of DVRs and new subscriptions to the TiVo service
have been disproportionately high during the holiday shopping season when compared to other times of the year. If we are unable to accurately forecast and
respond to consumer demand for our products, our reputation and brand will suffer and the market price of our common stock would likely fall.
We expect that a portion of our future revenues will come from targeted commercials and other forms of television advertising enabled by the TiVo
service. Expenditures by advertisers tend to be seasonal and cyclical, reflecting overall economic conditions as well as budgeting and buying patterns. A
decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers' spending priorities or increase the
time it takes to close a sale with our advertisers, which could cause our revenues from advertisements to decline significantly in any given period.
If we are unable to raise additional capital through the issuance of equity, debt or other financing activities on acceptable terms, our ability to
effectively manage growth and build a strong brand could be harmed. We may incur debt or lines of credits to which covenants attach which could
be violated if the Company does not meet its expectations.
We expect that our existing capital resources will be sufficient to meet our cash requirements through the next twelve months. However, as we continue
to grow our business, we may need to raise additional capital, which may not be available on acceptable terms or at all. We may also incur debt or lines of
credit which will subject us to restrictive covenants which if violated by us would cause us to incur penalties and increased expenses which could in turn harm
our business. If we cannot raise necessary additional capital on acceptable terms, we may not be able to develop or enhance our products and services, take
advantage of future opportunities or respond to competitive pressures or unanticipated requirements.
If additional capital is raised through the issuance of equity securities, the percentage ownership of our existing stockholders will decline, stockholders
may experience dilution in net book value per share, or these equity securities may have rights, preferences or privileges senior to those of the holders of our
common stock. Any debt financing, if available, may involve covenants limiting, or restricting our operations or future opportunities. For example, we may
seek to leverage our existing and future revenues to raise capital for investing in future subscription growth initiatives. Such financing activities may involve
the issuance of debt or other secured instruments tied to current or future revenues that may involve covenants limiting, or restricting our operations or future
opportunities or may involve other risks to stockholders.
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