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

To: Daniel Levy who wrote (1950)	2/11/2000 12:13:00 AM
From: prashanth	Read Replies (1) \| Respond to of 6516

Here's the take from Robertson Stephens on the earnings report: GEMSTAR REPORTS SOLID QUARTER Gemstar reported Q3:00 revenue of $61.8 million and EPS of $0.13, significantly above our estimates of $50 million and $0.09. The results reflect strong worldwide licensing revenue for Gemstar?s electronic programming guides and VCR Plus+. The revenue included a payment of $18 million in back-licensing fees from General Instrument. We believe the company could have exceeded our estimate without this payment by exercising revenue-recognition flexibility without jeopardizing future results. Licensing revenue is recognized when the device manufacturer (TV, VCR maker) notifies Gemstar of the number of units shipped in a given period. The company quoted an installed base of two million units, which we believe understates the unit growth since Gemstar last audited its licensing customers. We believe the fact that Gemstar received an $18-million payment effectively delayed recognition of other licensing revenue, lending visibility to future estimates. The company continues to execute strategically. In January, Gemstar entered a long-term strategic alliance with Thomson to pursue enhanced television opportunities. Thomson will expand the scope of Gemstar?s EPG by including the guide in 30 million televisions manufactured for North America through 2010. Thomson also agreed to adopt Gemstar?s two-way wireless paging service, which could be incorporated in TVs as early as 2001. Shares of Gemstar have been weak, apparently as some investors may question the closing of the merger with TV Guide. We believe the merger is on schedule for late April, based on recent events: This week, Gemstar publicly filed an S-4 pertaining to the pending acquisition; Gemstar and TV Guide set March 17 for their shareholder votes; and Gemstar announced its domestication as a U.S. company, a necessary step for the merger to close. In our view, Gemstar occupies a unique position at the center of a fast-growing market with a high-margin business model.