TiVo Shares Fall on News It Offered $120M in Convertible Senior Notes Due in 2016

The company will use the cash for research and development and to keep protecting through court challenges its intellectual property.

Shares of TiVo dropped 3.4% on Tuesday to $8.75 after the company said it offered $120 million in convertible senior notes due in 2016 to institutional investors.

TiVo will use the cash for research and development and to keep protecting through court challenges its intellectual property.

TiVo's shares have fallen 16% in the past eight trading days. On Tuesday, Evercore Partners analyst Alan Gould cut his price target, though only by 25 cents to $12.75.

He says TiVo's desire to raise the money doesn't indicate it has lost confidence in beating Dish Network in a lawsuit that has dragged on for years.

"TiVo is simply making sure that it is prepared for a worse case scenario," he wrote in a research note. "Also, the AT&T and Verizon litigation may be more expensive than we originally thought."

The Dish trial has stretched for seven years, and Gould figures the $120 million will allow TiVo to keep fighting for an additional three. He gives TiVo a 50% chance of winning an additional $700 million in a judgment against Dish and a 30% chance of being awarded $200 million-$300 million.

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