May 2, 2011
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of TiVo (Nasdaq: TIVO ) briefly rose more than 10% in intraday trading today after the company announced a $500 million settlement of its patent dispute with DISH Network (Nasdaq: DISH ) and EchoStar (Nasdaq: SATS ) .
So what: Under the terms of the agreement, TiVo will get $300 million immediately and $200 million more in six payments spread out between 2012 and 2017.
Now what: Interestingly, investors don't see the deal as adding $500 million in new value. TiVo trades for $1.18 billion in market value as of this writing, up $80 million for the day. The implication? TiVo's underlying business is too damaged to make the stock a long-term buy. Maybe, but I'm siding with Citadel on this. Seeing Dish open its wallet could scare AT&T, Verizon, and others to follow suit.
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