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Can TiVo Inc. (TIVO) Overcome Wall Street’s Doubts?

You can count June 7, 2013 as a day that will live in infamy for shareholders of TiVo Inc. (NASDAQ:TIVO).

The shares of the video-recorder trailblazer tumbled about 20% after the company said it would receive $490 million as a settlement for a patent lawsuit against Google Inc (NASDAQ:GOOG)‘s Motorola Mobility and other entities. Some Wall Street professionals had been looking for a settlement of as much as $1.7 billion.

TiVo Inc.

The sub-par sum also crystallized much of Wall Street’s pessimism about a company, which skeptics fear might have lived out its usefulness in the consumer marketplace. New splashy rivals such as Roku and Aereo have grabbed headlines lately, making TiVo look, well, oh-so-20th-century.

In today’s investing landscape, a company is often judged on the amount of buzz it can generate — both in its finances and its image.

The problem for TiVo Inc. (NASDAQ:TIVO) is that the court settlement underscored the company’s challenges on Wall Street. If you believe (as I do) that the stock market can be regarded as the ultimate arbiter of a company’s fortunes, it was easy to recognize that the judgment damaged the company’s standing in the investment community.

Remember, TiVo Inc. (NASDAQ:TIVO)’s stock had jumped 8% on Thursday, the day before the announcement, when Motorola Mobility revealed that it had accomplished an out-of-court settlement with TiVo Inc. (NASDAQ:TIVO). That occurred only days before the legal matter was supposed to go to trial and analysts were smacking their lips at the prospect of a very large payout in court.

Lazard Capital Markets’ Barton Crockett reacted swiftly and decisively by reducing his investment rating on the stock to “neutral” from “buy.” J.P. Morgan analysts, meanwhile, had planned to see more than $400 million from Motorola by itself.

The company’s board of directors tried to calm panicky shareholders. It announced a large expansion of the company’s stock repurchase program.

The board doubled the size of the authorization from $100 million to $200 million and extended the share-buyback plan for another two years until Aug. 29, 2015.

TiVo Inc. (NASDAQ:TIVO)’s stock price results reflect Wall Street’s questions about its prospects, but the company says it is pleased with the progress it is making in its balance sheet. CEO Tom Rogers deemed it to be “strong” on the day of the settlement.

Rogers added that the company’s cash position, following the settlement, would exceed $1 billion “before inclusion of future expected payments of at least $400 million from prior settlements.”