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Technology Stocks : Gemstar Intl (GMST)

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To: Paul Merriwether who wrote (550)	10/6/1999 9:48:00 AM
From: FLSTF97	Read Replies (2) of 6516

I just posted this on the G&K thread about my concerns regarding TVGIA. What does TVGIA bring to the GMST party?...(long post) Maybe NY STEW understands the Guide, but I find it extremely difficult to judge their sources of revenues. Their 10K from last year is one of the most difficult to comprehend that I've seen in a long time. Anybody contemplating buying more GMST had best look very closely into TVGIA's last 10Q. Although I like the monopolistic potential of the combined firms, these aspects of the TVGIA baggage concern me(all numbers are approx.): The increasing revenues are mostly due to recent purchases of entities with progressively worsening financials (Magazine and increase portion of SNG) The magazine group contributes about 20% of the OI. Its increase in revenues are due to a 30% hike in price offset by decreases in circ of 20% at the newstand and 7% subscribers. Operation Expenses grew 14%(could be due to postage and paper cost increases) against revenue growth of 10%. The SNG segment contributes over 50% of the OI. Its revenue growth is related to acquiring Turner Vision last year. That improved the operating efficiency but obscured the fact that the industry segment served decreased 12% in the last 12 months. If I understand their business segmentation correctly, then the IPG/EPG is within the Entertainment group. This currently contributes under 2% of the OI. On the plus side it is growing at 20% and the OI contribution was higher last year. Troublesome within this group is that Guide Channel subscriber base dropped 1% in the half and Sneak Prevue dropped 5% (despite a multimillion $ remake last year). Part of drop in OI contribution (OE went up 63% on Rev growth of 20%) was increased headcount and the "rebranding" of the Guide Channel. I don't watch TV much so I'm wondering if anybody on this thread has noticed this rebranding (launched in July) and comment if it will help retain/grow the subscriber base. The company has also invested what appears to be in excess of $10 mil in the Television Game Network. Anybody have an idea of how this contributes revenue? Is it content? To me, TVGIA is a strange beast. Many of its segments compete amongst themselves, which is a business model that I've never liked. I think it could definitely shed the software services and magazine distribution groups as they don't seem strategic at all. If they could find a buyer for C Band related businesses, they probably should, but the price would most likely be disappointing. Maybe their best option is to put the screws to cost controls and milk that cow down to the last subscribers left. Does anybody know why they can migrate this business to the Ku band feeds? Add on top of that the increase costs of interest and goodwill amortization and you start to wonder why they had such a high valuation in the first place. I hope Henry can whip them into a lean organization quickly. At least it is nice to know he has the tie breaking vote on the board. Anybody ever seen a company with 3 co-presidents before? Questions, Questions... Fatboy

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