TiVo (Nasdaq: TIVO) stock dropped more than 17 percent Friday after it announced that it would collect $490 million from the settlement of patent disputes with Time Warner Cable (NYSE: TWC) and rival DVR manufacturers Cisco (Nasdaq: CSCO) and Motorola Mobility.
Investors apparently expected a bigger payday for TiVo, which scored a $500 million settlement of a suit against Dish Network (Nasdaq: DISH) in 2011. Last year, Verizon (NYSE: VZ) agreed to pay TiVo at least $250.4 million to settle similar claims involving its FiOS TV service.
TiVo said it signed patent licensing deals with Time Warner Cable, Cisco and Motorola, which is now owned by Arris (Nasdaq: ARRS) and Google (Nasdaq: GOOG). It didn't announce plans to deploy TiVo set-tops in Time Warner Cable homes or an integration deal similar to TiVo's pact with Comcast (Nasdaq: CMCSA) which would let TWC subscribers use TiVo Premiere DVRs to navigate video-on-demand programming.
TiVo said the $490 million payment will come from Cisco and Google, which sold Motorola's set-top division to Arris in April.
Motorola had filed a patent infringement suit against TiVo in 2011. In March 2012, TiVo filed a countersuit against Motorola and Time Warner Cable, which is one of its biggest customers.
TiVo's board of directors attempted to reassure investors Friday by announcing that the company would double its share repurchase program to $200 million.
"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. We intend to use our significant capital resources to drive shareholder value, including more aggressively returning capital to shareholders under our newly increased share repurchase authorization," TiVo CEO Tom Rogers said in a prepared statement.
Shares in TiVo had dropped by 17.43 percent to $11.31 by 10:50 a.m. ET.
- see the release
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