Shares of TiVo Inc. rose Tuesday, as analysts said its latest patent settlement, with Verizon, was a clear positive for the pioneering digital video recorder maker and could help it win more money from other companies.
THE SPARK: The settlement with Verizon Communications Inc., announced Monday, awarded TiVo at least $250.4 million. Verizon will pay monthly license fees through July 2018 for each of its DVR subscribers above a certain level.
THE BIG PICTURE: The deal with Verizon is the latest in a string of patent settlements for TiVo, which developed the first commercially available DVR. The device made it easy for people to record programs and watch them later, skipping over ads.
But TiVo has struggled to make money, posting annual losses in eight of the past 10 years.
The settlements and ongoing litigation may bring it closer to profitability. TiVo has also won $500 million in a settlement with satellite TV company Dish Network Corp. and its set-top box provider EchoStar Corp., and $215 million from AT&T Inc.
The Alviso, Calif.-based company is set to go to trial in patent lawsuits over DVRs made by Google Inc.'s Motorola unit and Cisco Systems Inc. next year.
THE ANALYSIS: The latest settlement "is an obvious positive," said Barclays analyst Kannan Venkateshwar, because it makes it more likely that Google will also want to settle with TiVo.
Caris & Co. analyst David Miller said Tivo "will now set its sights on Time Warner Cable," which it also claims infringes its patent. He raised his price target to $16 from $14.
Spokesmen for both Google and Time Warner declined comment.
THE SHARES: Up 28 cents, or 2.8 percent, to $10.22 in heavy afternoon trading. Since the beginning of this year, TiVo shares had gained nearly 11 percent.