Rovi Corp Earnings: Margins Shrink on Rising Costs

Rovi Corporation (NASDAQ:ROVI) reported a drop to a loss in the fourth quarter driven by higher costs. Rovi focuses on powering the discovery and enjoyment of digital entertainment by providing companies a broad set of integrated solutions.

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Rovi Earnings Cheat Sheet for the Fourth Quarter

Results: Reported a loss of $49.3 million (46 cents per diluted share) in the quarter. Rovi Corporation had a net income of $67.2 million or 59 cents per share in the year earlier quarter.

Revenue: Rose 26.4% to $177.2 million from the year earlier quarter.

Actual vs. Wall St. Expectations: Rovi Corporation reported adjusted net income of 60 cents per share. By that measure, the company beat the mean estimate of 45 cents per share. It fell short of the average revenue estimate of $193.7 million.

Quoting Management: “We grew our Adjusted Pro Forma revenue by 12% in 2011 and our Adjusted Pro Forma Income Per Common Share by over 30% in 2011.” said Tom Carson, President and CEO of Rovi. “I am pleased with the many successes achieved across our business in 2011.”

Key Stats:

Gross margin shrank 4.2 percentage points to 83.4%. The contraction appeared to be driven by increased costs, which rose 69.7% from the year earlier quarter while revenue rose 26.4%.

Revenue has risen the past four quarters. Revenue increased 42.4% to $196.5 million in the third quarter. The figure rose 43.2% in the second quarter from the year earlier and climbed 24.1% in the first quarter from the year-ago quarter.

The company beat estimates last quarter after falling short in the previous two quarters. In the third quarter, it missed the mark by 16 cents, and in the second quarter, it fell short by 8 cents.

The company reported a net loss last quarter after booking a profit the quarter before that. In the second quarter, the company booked a profit of $10.7 million or 10 cents per share.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the first quarter of the next fiscal year is 44 cents per share, down from 50 cents ninety days ago. The average estimate for the fiscal year is $1.98 per share, down from $2.02 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com