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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (17606)2/13/2000 10:26:00 PM
From: NY Stew  Read Replies (1) of 54805
 
Mike,

To be more optimistic and I think more accurate, we would need to know the dollar amount of the fees Gemstar would have received this quarter had the arbitration not been necessary to collect those fees. Similarly, we would need to know the amount that would have been collected a year ago to ascertain the implied growth. Not having any of that information, I suspect that the company's growth that is important for us to recognize is somewhere in between the worst-case picture I painted above and the numbers shown in the financial statements.

It is my understanding that GIC and SFA shipped 1.3MM boxes this last Q and at $15/unit Gemstar should have generated the recognized $18MM. As to the total award amount I believe it will be at least $50MM as General Instrument has acknowledged liability between $25-36MM which does not include the punitive amount which would yield a 37.5-54MM range. Gemstar believes that it is due more and so I expect them to settle their differences or the arb panel will split the difference. Henry stated that future recognition will depend upon whether it is a settlement or an award. I am not qualified to explain his statement as to the accounting.

In consideration of the Q to Q comparison I believe it should be stated that a large portion of the year earlier Q IPG revenues came from Scientific Atlanta. I have been told they were approx 7MM. Operating Income this Q showed no receipts from either SFA or GIC less the 18MM accounted for as such.

Sorry to respond so late. I cut myself off from the PC for a few days and have no regrets.

Regards
Stew

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