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Technology Stocks : Gemstar Intl (GMST) -- Ignore unavailable to you. Want to Upgrade?

To: Andrew N. Cothran who wrote (119)	6/28/1999 1:43:00 PM
From: Moray	Respond to of 6516

From BancBostonRobbieStephens... GEMSTAR CLOSER TO PATENT PROGRESS - Gemstar appears to be making progress on litigation and new business partnerships which we believe could lead to a fundamentally different view of the company's potential. We believe we could hear some initial news out of the General Instrument arbitration within 2 to 3 weeks, with final results perhaps 3 or 4 weeks later. We grow increasingly convinced the outcome will be favorable to Gemstar, mirroring a nearly identical earlier victory against Scientific Atlanta. We believe the upside is a substantial boost to our license revenue estimates. We also appear closer to possible resolution of the more important litigation with TV Guide/TCI/AT&T, which continues in court-ordered settlement talks. We believe another settlement conference could happen within two weeks, possibly generating good news at that time. At the least, we expect settlement talks may end then, either positively with the two sides finalizing a settlement agreement that could be made public perhaps a month later; or negatively, with the case being returned to litigation that could take a year to complete. We expect any of this news would affect Gemstar's stock much more than its business, and we continue to tilt our expectations towards the positive. We expect TV Guide should be motivated to settle, as it may be unable to survive a ruling for Gemstar which would negate the exclusive agreement for AT&T/TCI to use TV Guide's EPG. We believe one benefit to AT&T of accepting the $5 billion investment from Microsoft is that AT&T can still have access to Gemstar's guide through Windows CE, even if talks between TV Guide and Gemstar fail. Gemstar appears eager to settle on favorable terms, although the case has become much less important to Gemstar than to TV Guide, in our view. We continue to believe Gemstar can distribute its guide to millions of households through new-model television sets, bolstered by satellite TV deals. The Hughes Network deal has recently been made stronger by the partnership between AOL (another Gemstar licensee) and DirecTV, in our view. We believe Gemstar will end up in a prime position to benefit from interactive television, having favorable licensing and revenue sharing agreements with Microsoft and AOL, and possibly later with AT&T.