TiVo Rises on Settlement With Verizon
Shares of TiVo (NASDAQ: TIVO) are higher on Tuesday after the company announced the settlement of a patent infringement lawsuit with Verizon (NYSE: VZ). The lawsuit was related to a certain DVR technology patented by TiVo. During Tuesday's trading session, TiVo was last trading up a little more than three percent to $10.25. Volume has been above average. Under the terms of the agreement, Verizon will make an upfront payment of $100 million to TiVo and will pay out an additional $150.4 million on a quarterly basis through 2018. As part of the agreement, the companies have dropped all pending litigation against each other.
In addition to the settlement, the companies have signed a mutual patent licensing agreement under which Verizon will pay monthly licensing fees to TiVo if its subscriber base for the Verizon DVR device surpasses a certain limit through July 2018. The settlement with Verizon marks TiVo's third successful settlement related to patent infringement litigation. The company previously settled for $500 million with DISH Network (NASDAQ: DISH) and EchoStar Corp. (NASDAQ: SATS). The second settlement was with AT&T (NYSE: T) for $215 million.
According to a report released by analysts at Brean Murray Carret & Co. on Tuesday, more positive catalysts on the legal front could be in store for TiVo going forward. They wrote that the "Verizon settlement could set off perfect storm. We believe yesterday's settlement with Verizon could just be the first of three positive catalysts for TiVo on the legal front. Specifically, we think there is a high likelihood that Motorola also settles before its case gets to court, that Cisco must follow suit shortly thereafter or risk competitive disadvantage, and that claims in these cases are in excess of $1 billion, extending deep into the installed base of cable DVR."
Brean Murray Carret & Co. has a Buy rating on the stock with a $14.00 price target. The analysts added that "if we are correct, not only would this imply upside from current share price levels, we believe it could put TiVo in a position to significantly enhance its strategic position in the marketplace."
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