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Technology Stocks : Gemstar Intl (GMST)
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To: scott who started this subject8/16/2000 10:16:58 AM
From: Mike Buckley  Read Replies (1) of 6516
 
Before posting the public message, uncle west sent it to me privately. The following is a copy (with his permission) of my private response.

I agree with everything in your write-up except for your perspective (if I understand it correctly) of the ad revenue.

For me, the ad revenue at the present time is a "bonus." It's still far too early to invest in Gemstar based on the ad revenue. Until critical mass is achieved and until Nielsen has been rating the advertising for at least a year or two I don't think the ad revenue will be substantive.

I'd be interested to learn from an accounting expert if it would have been appropriate for the company to issue pro forma numbers even though the TV Guide deal didn't close until after the reporting period. If it isn't appropriate, that explains why it wasn't done. If it is appropriate, that it wasn't done does make one wonder why.

I haven't looked closely at past numbers yet (and probably won't have the time to do that). My general impression is that though revenue growth has slowed, earnings growth is still huge due to increased margins.

I haven't paid a lot of attention to the details in the numbers because the acquisition changes the numbers so much. Post-acquisition numbers are muddy at best.

There is one other point we disagree about -- characterizing the growth in ad revenue. these are not tornado numbers. With all of the sequential growth in the last four quarters being in excess of 50%, that's definitely a tornado albeit the base is a very small chunk of change.

Any other thoughts?

--Mike Buckley
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