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Technology Stocks : Gemstar Intl (GMST)
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To: scott who wrote ()2/15/2000 3:15:00 AM
From: FLSTF97  Read Replies (2) of 6516
 
The more I learn about TVGIA, the more I hope the merger is blocked.

I see the value in obtaining the Brand Name and marketing/sales team, but the other baggage will be a real drag on GMST.

The financial statements from TVGIA are very complicated and the press releases are on the verge of being misleading. TVGIA likes for investors to focus on EBITDA which of course looks much better especially if you bought operations with decreasing revenues/ profits and you paid too much for them in the first place. The effect of dilution and D&A (probably some interest in there as well but it is not well documented in the releases) can be seen in the decrease in net earnings from $0.59 to $0.02 per share.

If you just look at the effect of the C-Band subscriber purchase and the Guide impact on TVGIA's earnings, you really have to wonder if those purchases were really an "arms length" transaction or done to benefit the previous owners.

At the rate the C-band subscriber base is decreasing, it will cease to exist in 2 years. Clearly this trend away from C-Band was visible in 1998, so wherein lies the strategic value of this purchase? Can somebody help me understand this?

Here's the bottom line: EBITDA does not directly translate into share holder equity. Don't be mislead by an increase in EBITDA that is due solely to having purchased other operations.

I originally wanted to remodel the revenue projections I did last fall for the combined companies, but due to lack of adequate public information, I've come to the conclusion that this is futile.

I'm still bullish on GMST's prospects, but I'd be more bullish if I knew the merger would be disallowed.

FATBOY
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