TiVo shares decline

TiVo Inc. shares dipped Monday after the Supreme Court refused to hear arguments on whether a new digital video recorder system from Cablevision Systems Corp. violates copyright law _ which an analyst noted could hurt or help the digital video recording pioneer.

Shares of Alviso, Calif.-based TiVo fell 40 cents, or 3.6 percent, to $10.63.

The justice's decision not to hear arguments means Cablevision _ and potentially other cable system operators _ will soon be able to offer DVR service to consumers without the need for an in-home box. The remote storage unit is contained on computer servers that a cable provider maintains. Hollywood studios and television networks have been fighting against the system since it makes it easy to bypass commercials.

In a client note, Janney Montgomery Scott analyst Tony Wible said the court's decision not to hear arguments could be a negative for TiVo by leading to a new debate over the company's patent. Since TiVo has said its patent doesn't state where the DVR's hard drive is located, a cable provider using networked DVRs "would still potentially be in violation of the TiVo patent," he said.

On the flip side, the court's action could mean that it will be much cheaper for cable companies to offer DVR service, which may lead to more people using them.

"That could give TiVo a larger opportunity to grow and present more incentive for (studios and cable system operators) to back TiVo's DVR advertising service," he said.

Wible, who rates TiVo shares "Buy" with a fair value estimate of $18, said it's still "just too soon" to tell how the move will impact the company.