Lack of DISH Ruling Disappoints TiVo Holders

TiVo (TIVO) shares are down sharply late this afternoon, apparently on investor disappointment that the judge overseeing the company’s patent infringement case against Dish Network (DISH) did not issue a ruling today in a dispute over whether DISH had violated an injunction issued earlier this year after DISH had been found to be in violation of two TiVo patents.

Dow Jones Newswires reports that the two companies were in court today for a hearing on the issue. The wire service story notes that there was no decision today; ergo, DISH can (at least for now) continue to distribute the DVRs that are at the heart of the patent suit. TiVo has been asserting that the workaround for the patents in question that DISH has developed does not cure the patent infringement.

Citigroup’s Tony Wible pointed out in a research note this afternoon that the sell off in TiVo shares “is likely driven by event-driven investors interpreting the absence of a decision as incrementally more favorable for DISH.” He says a decision could come later this month, but that “timing is still uncertain, leading to more frustration and selling pressure.”

Alan Gould, an analyst with Natixis Bleichroeder, in his own note on the situation, wrote that the bottom line is that “it could take a while before the judge issues his decision, and his decision could be that he wants to look at the [DISH] workaround, which would delay the decision even further.” Gould notes that TiVo asked for $220 million in damages. Gould adds that he does not anticipate an out-of-court settlement in the case.

Both analysts maintain Buy ratings on the stock.

TIVO today was down $1.44 at close, or 16.5%, to $7.31. DISH ended the day down 57 cents, or 2.01%, to $27.76.

Comments

[Wall_St_Geek:]

If you want a better perspective, check out the investor boards at fool and investor village. Both of those had people who actually WENT to the hearing yesterday and can give you a perspective on what was said and the general demenaor of the judge.

While each of the items mentioned by the analysts COULD happen, IMO the judge just wants to be seen to have considered this matter carefully, given that E* has said they want this to be heard by the Supreme Coury (unlikely). We should have a ruling within 2-3 weeks, and personally I will be adding to my position at these prices in anticipation of a positive ruling for TIVO.

2008 Sep 05 08:44 AM