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F14Q3 Inventory & SAC Update
TiVo Purchase Obligations revealed in their Q3 remained at elevated levels going into the holiday season which isn't a surprise. There is a lot of positive's revealed by taking a closer look at the following exhibits. SAC and associated retail hardware subsidy of only $80/sub is the lowest level since Q2 of FY11's $76/sub. MSO hardware margin remained in the 20% range. Of note is the average retail hardware revenue per sub which is $291 that portends a high number of more expensive Roamio Plus and Pro boxes sold during the quarter. I'm looking for this number to come down significantly in Q4 with the $50 price cut on the base Roamio and associated pick-up in volume on the lower-end Roamio box.
A closer look at Q3 inventory reveals a 20% drop in purchase obligations. Inventory turnover ratios were extremely good and the highest levels in two years. The bottom-line reflects that TiVo's discipline managing SAC and hardware inventory is paying off and improving the profitability of the company.