TiVo Slumps on EchoStar Ruling
© 2006 The Associated Press
NEW YORK — Shares in TiVo Inc. continued their decline Wednesday after an appellate court granted a stay on an injunction that would have banned EchoStar Communications Corp. from making or selling DVR products in the U.S.
Bear Stearns analyst Kunal Madhukar said uncertainty related to the litigation process is likely to continue for one to two years. He downgraded the stock to "Underperform."
Tuesday's ruling _ the latest in a two-year-old patent dispute between the maker of digital video recorders and the operator of the Dish satellite television network _ postpones a ban issued in September pending an appeal of another court's ruling. That decision found that EchoStar DVRs violate TiVo's patent on its "time warp" software, which controls how viewers can pause and rewind live television shows.
As part of the initial ruling, the court ordered EchoStar to stop making and selling the DVRs and to take back existing models from subscribers, sending TiVo shares surging.
Tivo shares lost nearly 7 percent after the market closed Tuesday. In recent trading on the Nasdaq, TiVo fell 76 cents, or 10 percent, to $6.77. Madhukar said the decline resulted in the stock's giving back gains from when the original ruling was issued.
If TiVo ultimately prevails, EchoStar will likely be forced to license the TiVo software _ otherwise it will have to stop offering DVRs. TiVo already has such a deal with EchoStar competitor DirecTV Group Inc., and similar deals with cable companies such as Cox Communications and Comcast Corp.
But Madhukar thinks the introduction of high definition recorders could hurt TiVo in the short term, particularly as cable companies offer their own versions of standard definition DVRs.
EchoStar shares added 12 cents to $32.19 in recent trading on the Nasdaq.
© 2006 The Associated Press
NEW YORK — Shares in TiVo Inc. continued their decline Wednesday after an appellate court granted a stay on an injunction that would have banned EchoStar Communications Corp. from making or selling DVR products in the U.S.
Bear Stearns analyst Kunal Madhukar said uncertainty related to the litigation process is likely to continue for one to two years. He downgraded the stock to "Underperform."
Tuesday's ruling _ the latest in a two-year-old patent dispute between the maker of digital video recorders and the operator of the Dish satellite television network _ postpones a ban issued in September pending an appeal of another court's ruling. That decision found that EchoStar DVRs violate TiVo's patent on its "time warp" software, which controls how viewers can pause and rewind live television shows.
As part of the initial ruling, the court ordered EchoStar to stop making and selling the DVRs and to take back existing models from subscribers, sending TiVo shares surging.
Tivo shares lost nearly 7 percent after the market closed Tuesday. In recent trading on the Nasdaq, TiVo fell 76 cents, or 10 percent, to $6.77. Madhukar said the decline resulted in the stock's giving back gains from when the original ruling was issued.
If TiVo ultimately prevails, EchoStar will likely be forced to license the TiVo software _ otherwise it will have to stop offering DVRs. TiVo already has such a deal with EchoStar competitor DirecTV Group Inc., and similar deals with cable companies such as Cox Communications and Comcast Corp.
But Madhukar thinks the introduction of high definition recorders could hurt TiVo in the short term, particularly as cable companies offer their own versions of standard definition DVRs.
EchoStar shares added 12 cents to $32.19 in recent trading on the Nasdaq.
