Why TiVo Shares Got Crushed

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  ) got crushed today, down by 19% at the low, after the company settled an ongoing patent suit with several tech companies.

So what: Google and Cisco Systems will pay TiVo a lump sum of $490 million to settle the litigation, and TiVo has entered into licensing agreements with Google, Cisco, and Arris. Following the settlement, TiVo will use the funds to increase the company's stock repurchase authorization, doubling it to $200 million and extending it through August 2015.

Now what: All pending litigation has now been dismissed as part of the settlement. TiVo now expects lower litigation costs for the current fiscal year. The sum is less than investors were hoping for, as many were expecting Google's portion alone to be in the neighborhood of $500 million, in addition to another payment from Cisco. TiVo also received downgrades from Barclays and Janney Montgomery Scott following the announcement.

Interested in more info on TiVo? Add it to your watchlist by clicking here.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.


Read/Post Comments (3) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 07, 2013, at 4:26 PM, trismigistus wrote:

    TIVO is now on the block for a buyout offer @ $20 per share.

    That is the real value in the settlement and why they settled for less.

    TiVo would be attractive to any company trying to become a more important part of the new video ecosystem.

    Google, Microsoft, Rovi, just to name a few.

    TIVO will likely be on steroids next week. The shorts will have to exit at some point and there will be a pop. Today's reaction was way oversold especially considering the massive accumulation of shares held by institutions.

    Today's bear attack and negative media spin on great news was prompted by HFT Traders to give them time to exit their short positions and effect their expiring options.

    If you believe the Patriot Act is Patriotic then by all means short TIVO. From where I sit the negative media spin is pure doublespeak to give the sharks time to reshuffle the deck in their favor.

    TiVo president and CEO Tom Rogers said in a statement. "this settlement significantly enhances our already strong balance sheet, bringing our cash position to over $1 billion before inclusion of future expected payments of at least $400 million from prior settlements,” Rogers went on.

    Divide 128 million shares by 1.4 billion in cash and you get $11 per share. I think it is a no-brainer TIVO is worth considerably more than that.

    Does it not occur to people that there is more to the settlement than what we yet know about.

    Buyout talks that could not move forward without a settlement perhaps? TiVo would be attractive to any company trying to become a more important part of the new video ecosystem. Google, Microsoft, Rovi, to name a few. Quite a few others as well. A buyout would could easily fetch $20 per share.

    People are jumping to the conclusion that TIVO made a mistake settling for too low a price when none of us know what was behind their decision.

    True value will be apparent next week. This is a manipulated shakeout by the HFT traders to reset their positions plain and simple.

    Right now it is a no-brainer quick flip swing trade for a buck, or more per share.

  • Report this Comment On June 08, 2013, at 11:49 AM, ipo2982 wrote:

    I agree that it's a fantastic buyout candidate. It would be an excellent way to jump-start an AppleTV by instantaneously having it installed in 3.4 million homes worldwide (1 million TiVo owned machines + 2.4 million MSOs and growing).

    Not only Apple, but a number of different companies could do this by purchasing TiVo.

    I own a TiVo machine + I love it. It's extremely high-tech, yet VERY user friendly. An exact fit for what Apple is known for. And I'd be much more likely to switch from Windows/Android computers/phones to Apple if my TiVo machine was a TiVo-Apple DVR that integrated seamlessly with Apple products.

  • Report this Comment On June 09, 2013, at 12:15 PM, will1946 wrote:

    Well, I haven't an idea why it got crushed...because instead of a billion, it got only half a billion? Give a reason a reasonable person can understand, please.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2478376, ~/Articles/ArticleHandler.aspx, 12/21/2014 10:59:43 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement