TiVo to Go?

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Owning a stake in TiVo (Nasdaq: TIVO) over the past few months -- as opposed to the past few rocky years -- has probably been a lot like hitting the green "thumbs-up" button on the TiVo remote control. The shares have been trickling steadily higher on recent news such as an extension of TiVo's watered-down partnership with DirecTV (NYSE: DTV) and Thursday's legal victory over EchoStar (Nasdaq: DISH).

That last point is important. A Texas jury awarded TiVo a mere $73 million verdict in its patent-infringement lawsuit against the country's second-largest satellite television provider. But the outcome could open the door for more cases against cable providers and makers of digital video recorders.

Even though TiVo's market share of the DVR space continues to dwindle with every passing year, the company has a few things going for it, such as its pioneering patents, its cutting-edge technology, and its killer brand.

Yes, the likes of Motorola (NYSE: MOT) and Cisco's (Nasdaq: CSCO) Scientific-Atlanta are carving up the market as cable and satellite television providers turn to these set-top makers to incorporate DVR features into their new boxes. And that's why it will be important for TiVo to test the legal limits of how much of that growth has come from rivals piggybacking on its patents.

Over the weekend, meanwhile, a critical Barron's article on TiVo's future conceded that a "buyout may in fact be the best exit strategy for TiVo." That wasn't the first time TiVo has been takeover fodder, and it wasn't just rival DVR manufacturers or even the computer makers that Barron's suggested as new parents. Both Tim Beyers and I have even argued that Google (Nasdaq: GOOG) would be a good match for the DVR pioneer, given TiVo's move into selling advertising space.

This will be an interesting situation to monitor. There is a problem, though: If TiVo didn't find any acquisitive sniffs worth pursuing when its shares were trading for less than half of where they are now, are companies really going to open up their wallets even wider now that the stock is trading at a two-year high as of Monday morning?

If a healthy buyout offer does come through, it will vindicate the stock's recommendation to Motley Fool Stock Advisor newsletter subscribers three years ago. It would mean a long time had to pass before the ultimate "thumbs-up" button finally got pressed -- but it would also be a moment worth pausing, rewinding, and watching over and over again.

Longtime Fool contributor Rick Munarriz does have a TiVo, but he does not own shares in the company.The Fool has a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.