TiVo's Shares Jumped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of digital video recorder veteran TiVo (NAS: TIVO) jumped as high as 19.7% today on heavy trading.

So what: Last night's second-quarter report delivered 18.7% year-over-year sales growth and a smaller net loss than expected. This time the results weren't inflated by a one-time legal settlement gain from DISH Network (NAS: DISH) and EchoStar Communications (NAS: SATS) -- TiVo pulled out a fine quarter on the merits of its day-to-day operations. Management also announced a $100 million share buyback plan to take advantage of severely depressed share prices.

Now what: TiVo is remaking itself into a software and technology-license provider in the vein of Dolby Laboratories (NYS: DLB) or Rambus (NAS: RMBS) . Expect more service and technology revenue going forward, but less hardware sales and fewer direct subscribers. The Dish settlement was smaller that many of us had expected in immediate dollar terms, but still created a framework for plenty of court-backed licensing action.

Interested in more info on TiVo? Add it to your watchlist.

At the time thisarticle was published Fool contributor Anders Bylund owns shares of TiVo but holds no other position in any of the companies discussed here. Motley Fool newsletter services have recommended buying shares of Dolby Laboratories. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.