Financial News Media Butchers TiVo’s Earnings Report


Dear Investors,

On May 3 and 4, 2017, the financial news media made such a mess in their reporting of TiVo Corp.’s (TIVO) first quarter financial results that I felt compelled to set the record straight. The following is the text of the Special Bulletin that I sent to subscribers of Cabot Undervalued Stocks Advisor on May 5, 2017.

Happy investing!


Crista Huff

Chief Analyst

Cabot Undervalued Stocks Advisor


* * * * *


In brief:

TiVo Corp. reported first quarter 2017 non-GAAP $0.40 earnings per share (EPS) vs. the consensus estimate of $0.27. News agencies reported all of the following incorrect EPS numbers: (0.29), $0.22, $0.29, $0.30 and $0.45.


The full story:

It’s earnings season, and TiVo (TIVO) reported first quarter 2017 results on May 3, after the market closed, which I discussed in a Special Bulletin to subscribers yesterday. Various financial media reporters looked at the company’s press release, and each proceeded to report various inaccurate numbers to their readers. That’s because TiVo did not report a number for non-GAAP earnings per share (EPS), which is the number Wall Street analysts use to make earnings projections, and to compare results to a company’s recent quarterly and annual performance. However, TiVo did provide the numbers that are used to calculate non-GAAP earnings per share.

  • At 5:52 PM ET on May 3, Reuters reported a first quarter loss of (0.29) per share, using GAAP basic and diluted EPS numbers. But Reuters never reports GAAP numbers! Reuters reports non-GAAP numbers and makes direct comparisons to the non-GAAP consensus earnings estimates, so that investors can see whether the quarterly results came in above or below estimates.

  • The Associated Press reported adjusted EPS of $0.30, but news agencies that published the AP story (Yahoo Finance and CNBC) used GAAP numbers in headlines, such as “TiVo Reports 1Q Loss”.

  • On the evening of May 3, reported EPS of $.045.

  • On the morning of May 4, Zacks reported adjusted EPS of $0.22.

  • On the morning of May 4, the Charles Schwab website posted a brief mention of first quarter 2017 results, but they inadvertently used fourth quarter 2016 numbers.

  • Later in the day on May 4, the Charles Schwab website reported first quarter EPS of $0.29.


So what’s the truth? The actual calculation did not seem complicated. TiVo’s press release included all of the following numbers, except non-GAAP EPS, so I did the calculation:


Non-GAAP Pre-tax Income                        $ 53,967,000

Estimated Cash Taxes                             – $   6,000,000

Non-GAAP Net Income                              $ 47,967,000


Non-GAAP Net Income                              $ 47,967,000

Non-GAAP Shares Outstanding*              ÷ 120,316,000

Non-GAAP Earnings Per Share (EPS)           $        0.40

Wall Street Consensus Estimate                 $        0.27

* Non-GAAP Diluted Weighted Average Shares Outstanding


Still, I felt uncomfortable publishing that number in my Special Bulletin to subscribers yesterday, because it didn’t agree with any of the news reports. I was thinking, “What am I missing here?” It turns out that I wasn’t missing anything.

And then I found this on the transcript of TiVo’s earnings conference call from the afternoon of May 3:


Question (from an analyst at an investment firm): “I’ll start off with a housekeeping question to calculate non-GAAP EPS. So I have around $54 million in pretax income and $6 million in cash taxes. And using 120 million in diluted share count, does it direct to $0.40 non-GAAP EPS?”

Answer (from Peter C. Halt, TiVo’s CFO): “That would be the correct calculation.”


And there you have it: $0.40 EPS, everybody reported it wrong, and the share price fell dramatically.

I tend to be relaxed about share price volatility, because everything eventually comes out in the wash. The analysts and institutions that propel the bulk of stock purchases will not misunderstand the company’s financial reports. They will recognize a bargain when they see it, and they will drive the share price up.

In the meantime, I just want to encourage investors to buy stocks in financially healthy companies, and be prepared to hold those stocks through volatile time periods, in order to reach the pot of gold at the end of the rainbow.


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