Did TiVo’s Google Settlement Meet Expectations?

TiVo Inc. (NASDAQ:TIVO) has settled a patent dispute over digital video-recording technology with Google’s (NASDAQ:GOOG) Motorola Mobility unit, Cisco Systems Inc. (NASDAQ:CSCO), and Time Warner Cable (NYSE:TWC) for $490 million.

Analysts had expected the pay-out from Google, Cisco, and Time Warner to be much higher. The payments bring the total settlements from use of TiVo’s patents to $1.6 billion. TiVo has made previous settlements with Dish Network (NASDAQ:DISH), AT&T (NYSE:T), and Verizon (NYSE:VZ).

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

TiVo shares were down 19 percent on Friday morning after rising Thursday afternoon in anticipation of the settlement. Some analysts had expected TiVo would receive up to $1 billion from Motorola alone, so the $490 million settlement between the 3 companies was far below estimates.

Google accepted responsibility for the patent litigation after it bought Motorola Mobility last year for $12.4 billion. Google has retained Motorola’s mobile phone division while selling off its cable and broadband divisions to Arris (NASDAQ:ARRS), a company that sells communications equipment to cable operators. Under the terms of the deal, Arris is responsible for up to $50 million in damages towards the TiVo settlement.

TiVo will use part of the payment for damages and put most of it towards doubling the size of a stock-repurchase authorization to $200 million. The settlement was reached only a week before the companies were to begin a trial related to the use of TiVo’s intellectual property.

Despite the small settlement, TiVo is feeling optimistic about the future. “We are pleased to reach an agreement that brings our pending litigation to an end and further underscores the significant value our distribution partners derive from TiVo’s technological innovations and our shareholders derive from our investments in protecting TiVo’s intellectual property,” TiVo president and CEO Tom Rogers said in a statement.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

“Further, 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,” Rogers went on.

Don’t Miss: Can Sprint Nextel Continue This Bullish Run?

More from The Cheat Sheet