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Technology Stocks : Gemstar International Group (GMSTF)

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To: DavidG who wrote (15)3/15/1997 9:24:00 PM
From: The Thrifty Investor   of 226
 
David, the earnings by themselves are not the key item to look at for a company in this stage of market penetration. The increase in revenue looks extremely promising. The following gives the ramp of sequential quarterly revenues starting in 3Q94 in millions of dollars: 0, 0.07, 0.21, 0.34, 0.44, 0.91, 1.25, 1.53, 2.21, 3.71. Last year there was a $25.0 net loss. However, this included a $4.7 million litigation charge due to the legal battle with Gemstar. These expenses will now be gone. Therefore, breakeven is only about $20 million away. The cost of servicing additional subscribers is minimal. This company is no where near the saturation point of its market. I would estimate that Starsight will achieve breakeven in about 12 to 18 months and then quickly become extremely profitable.
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