)-owned Motorola have settled their patent infringement lawsuit
out of court. The settlement ends a long standing dispute between
TiVo and Motorola which dates back to early 2011. In Feb 2011,
Motorola Mobility accused TiVo of infringing DVR patents.
Motorola indicated that it was seeking to protect its
interests after TiVo sued
), which used Motorola's technology, for patent infringement.
Motorola claimed that it had acquired the DVR patents through the
acquisition of Imedia, which had filed for the patents in Apr
TiVo countersued Motorola in Mar 2012 alleging that the latter
had infringed three DVR-related patents. Although the terms of
the settlement were not disclosed, we believe that the closure of
Motorola suit will lower TiVo's litigation expense going
In the recent years, TiVo has successfully defended its patent
litigation lawsuits and has monetized its patents. The end of the
lawsuit with Motorola will be the company's fourth settlement
following the settlement of its disputes with Verizon, DISH
) and AT&T.
Through these settlements, TiVo has not only ensured a
recurring revenue stream till 2018, but has also succeeded
in lowering apprehensions about its patent rights. This will
supposedly enable TiVo to freely use the technology going
However, pending patent litigation issues against Cisco
coupled with rising research and development (R&D) costs,
higher hardware and sales & marketing costs are expected to
impact TiVo's profitability over the next few quarters.
Increasing competition from cable and satellite providers could
also hurt profitability over the long term.
Nevertheless, we remain optimistic about TiVo's growth
potential owing to the new MSO partnerships (GCI and
Midcontinent), product launches and international expansion
opportunities. Moreover, the successful monetization of patents
also ensures a recurring revenue stream for the company over the
Currently, TiVo has a Zacks Rank #3 (Hold).
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