A negative outcome would have meant: "Company could ultimately be required to pay damages to VeriSign in an amount that may be material to its financial condition and results of operations" (according to RNWK). Now this is out of the way.
J.P. Morgan upgrades the stock today:
RNWK Dodges The Bullet As Arbitrator Changes His Mind, Disposes Of Claims. Upgrading To Neutral. Price: $3.45 Entertainment Vasily KarasyovAC (1-212) 622-5401 email@example.com
We are upgrading RNWK shares to Neutral from Underweight following the ruling in the RealNetworks – VeriSign arbitration which was more favorable for RealNetworks than we feared. We remain cautious about the company’s operating outlook, however. Our upgrade reflects the removal of the risk to the cash balance which we think provides downside support for the shares, not a material improvement in operating trends.
We think the Arbitrator’s ruling removes the downside risk to the company’s cash balance which we estimate at $2.76 per share or 83% of the December 8th closing price. Our Underweight thesis was predicated on our belief that damages that could be awarded to VeriSign could be material and presented a significant downside risk to RealNetworks’ cash position and therefore the stock price. Based on our reading of the filing and our discussions with legal experts we think the ruling removes this risk and thus we are upgrading the stock to Neutral.