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Why TiVo Corp. Shares Jumped 18% Today

By Anders Bylund - May 30, 2017 at 4:12PM

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The company is looking for a new CEO, but a legal ruling could push Comcast to a costly patent suit settlement this summer.

What happened

Shares of TiVo ( TIVO ) soared on Tuesday, rising to a 17.5% daily gain as of 3:15 p.m. EDT.

So what

TiVo's surging share price resulted from two separate news items.

  • TiVo CEO Tom Carson announced his retirement after six years at the helm of this company and its predecessor, Rovi. TiVo's board of directors is looking for a replacement and will consider both internal and external candidates. Carson will continue to serve as TiVo's CEO until a suitable successor has been found.
  • In a patent battle started 13 months ago, where Rovi complained that Comcast ( CMCSA -1.29% ) had infringed on six of its technology patents, an administrative-law judge ruled that the cable giant has violated two of those six patents. The case can now move forward, and analyst firm Cowen & Co. argues that Comcast had better settle before TiVo brings more patent firepower to this fight.
TV remote pointed at a blurry television.

Image source: Getty Images.

Now what

Cowen's analysis is based on the fact that TiVo already has another lawsuit going through the early motions against Comcast, this time including eight patents. This proceeding is set for an important Marksman hearing in July and could stop Comcast from importing its set-top boxes to the U.S. as early as September.

Tuesday's jump was large, but TiVo shares are still trading 8% lower year to date. If Comcast follows through with a big-money settlement, the digital video recorder and on-screen program guide specialist should catch a real second wind.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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