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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Uncle Frank who wrote (7918)	10/9/1999 7:27:00 PM
From: NY Stew	Read Replies (1) of 54805

Uncle Frank, Gemstar This phase of the arbitration arose from General Instrument's deployment of electronic program guides on its analog cable set top boxes, which the panel found to be willful and malicious misappropriation of StarSight Telecast's proprietary technology and intellectual property. General Instrument The arbitrators rejected StarSight's interpretation of its patents and also found that GI did not commercialize products that incorporate those patents. The bottom line is that someone has roughly $50-60 million more and someone else has less. As to the digital STBs, GI has stopped deployment of a guide service with their newest digital box. This move speaks for itself. Gemstar acquired and was issued numerous patents since the analog arb time frame of early to mid 90's. The acquisition of the Levine Patents was one of Henry's better moves in my view. General Instruments has more cases ahead of it. Somewhere along the line either an arb panel or a judge will hit them with an injunction. In this past analog case they relied upon TV Guide's support but this in no more. AT&T (10 year exclusive TV Guide contract) is by far GI's largest customer. And after July 1, 2000 they will need to compete in retail against the likes of Thomson, Sony, Philips, Matsushita and others ... all of which license Gemstar. The deck is stacked against them and I see a settlement ahead. The odds against it would seem too great for Motorola to risk in their new venture. GI and SFA will be knocking on Gemstar's door soon if not already to get the TV Guide & AT&T business and just as importantly to get into a competitive position for retail launch. Neither SFA or GIC have ever competed in a free market. The CE OEM giants will eat their lunch unless they license Gemstar and offer a competitive retail product. You have already witnessed two major cable contracts won by Philips and Sony. If they cannot defend their own turf what do you expect next year when cable STB functionality is built into DVD's, gameplayers, VCRs and TVs? Just an overview of how I see the bigger picture. Regards Stew

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