| Stock (Symbol) | Stock Price | |
Rovi (ROVI) |
$55 |
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| Data is as of | Expected to Report | Sector |
March 22, 2011 |
May 7 |
Technology |
| Sharek’s Take | ||
 Rovi will be sold from the Growth Portfolio today due to a slow-down in profit growth. Rovi is a great company with 4600 patents for the electronic menu guide business. The company has signed up GoogleTV and AppleTV as customers to go alongside with cable operators (menus on your cable box) and TV manufacturers. The trouble is Rovi is signing deals to get revenue and market share but not getting enough profit.Recently the company purchaes Sonic Solutions, which makes DVD burners liek in your computer. I used to follow Sonic and had to sell the stock as it wasn’t great. Rovi paid $720 million for Sonic and financed $250 million of the purchase. Now this is debt. Interest eats into profits. Someday Rovi might make big-bucks of ads that are on its menu guides, so I’ll keep the stock on my radar. |
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| One-Year Chart | ||
 The one-year chart shows profits were growing fast (bottom left) and now growth has slowed (bottom right). It’s not like I’m jumping the gun and selling ROVI too soon — growth has already slowed. 23 times earnings is a little high for this stock seeing that growth is going to be around 6% the next two quarters. |
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| Earnings Table | ||
 Profit growth was only 8% last quarter. Sales were up only 2% last quarter — yikes.Rovi only beat by a penny last quarter, had it done better I’d probably hold the stock. Annual Profit Estimates declined some. On a positive note revenue is expected to climb 49% this year. But how much of that is from Sonic, which hasn’t been a tremendously profitable company? Quartley estimates look poor until four quarters from now. We can sell the stock and get back in later. |
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| Fair Value | ||
 I used to think ROVI was worth 25 times earnings. Now I think a P/E of 20 is generous. This stock has limited upside to Fair Value even a year out. |
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| Ten-Year Chart | ||
 Rovi used to be named Macrovision (MVSN). Macrovision IPO’s in 1997 and changed its name in 2009. Macrovision crashed during 2000 like many tech stocks did.This ten-year chart is one of the worst looking ones in the Growth Portfolio. Profits though (left bottom) are at record highs which is good. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
N/A |
I’ll sell Rovi from the Growth Portfolio today. This company needs to get better profit margins when it signs new deals. I’m also sceptical of Sonic Solutions. I’ll keep ROVI on my radar, for now anyway. | |
Aggressive Growth Portfolio
N/A |
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