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

To: Mike Buckley who wrote (3044)	5/24/2000 1:20:00 AM
From: NY Stew	Read Replies (3) \| Respond to of 6516

Microsoft, Gemstar Vie As EBook Technology Pioneers By CHRISTINE NUZUM NEW YORK -- As vacationers compile their summer reading lists, media and technology companies are jockeying to pioneer replacing the beloved paperback with a portable electronic device. With the announcement that bestselling novelist Michael Crichton's latest book will be available free for Pocket PC users, Microsoft Corp. (MSFT) touted its wares to high-tech bookworms. Aided by Microsoft Reader technology, users of pocket personal computers made by Hewlett-Packard Co. (HWP) and Casio Computer Co. (J.CAS) will be able to download the novel, entitled Timeline, from the BarnesandNoble.com Inc. (BNBN) Web site. Meanwhile, Time Warner Inc. (TWX) confirmed a Wall Street Journal report that it will launch ipublish.com, an online publishing unit, early next year. The unit will have promotional relationships with both Microsoft and Gemstar International Ltd. (GMST), currently considered in a position to become a market leader in fledgling electronic book technology. Gemstar's eBooks differ from Microsoft's because they are viewed on a proprietary electronic device rather than on a personal computer. Gemstar analysts think this gives the Pasadena, Calif. company distinct advantages in marketing to readers as well as publishers. Enhanced security makes Gemstar's products more attractive to publishers, said SG Cowen's Robert Stone, who rates Gemstar at strong buy. He said that since multiple applications can't run on Gemstar's devices, they are more insulated from security breaches than are computers, which can be programmed to bypass security measures. A reader could more easily copy and distribute an electronic book viewed on a Pocket PC with Microsoft reader than on a Gemstar device, he said. A Microsoft spokesman said the Microsoft Reader system is "a fairly safe approach," because the books it distributes are only available through pocket PCs. The files for sale are encrypted on the Barnes & Noble server, he added, and a new release of Microsoft Reader expected later this year will have a "much more robust encryption digitalized management system." Gemstar's product is also lighter and has a battery life of 40 hours - much longer than that of personal computers, Stone added. "A notebook computer is not something that you can curl up with on the beach," he said. Nonetheless, Gemstar shares fell 14.3% Tuesday. Most of the decline was late in the day and volume was relatively light - 2.1 million shares compared with the 10-day average of 2.6 million. Analysts doubted the selloff was related to Microsoft's announcement. "This is not new news about Microsoft," Stone said. Microsoft released its eBook technology last August. He said the news that Time Warner will enter the eBook market is an endorsement of the technology that Gemstar has invested so heavily in. "This is a very early stage market and Gemstar remains extremely well-positioned within it," said Lawrence Marcus of Deutsche Banc Alex.Brown. "The fact that big media companies are starting to focus on this validates the opportunity." Crichton himself took the stand on CNBC Tuesday morning with an executive of Bertelsmann AG's (G.BRT) Random House Inc. publishing unit to endorse eBook technology. In January, Gemstar bought two eBook publishers - NuvoMedia Inc. and SoftBook Press Inc. - in a deal valued at $564 million. Less than two months later, the company signed a deal with France's Thomson Multimedia (TMS) to cooperate on manufacturing devices to read eBooks. The deal was seen as an effort reduce the costs of such devices, seen as a barrier to market acceptance. At the time of the deal, NuvoMedia's Rocket eBook was priced at $199, but the company reportedly aimed to cut its retail price to less than $100. Even at current prices, Gemstar's devices are considerably cheaper than the portable computers needed to view eBooks with Microsoft Reader, Stone emphasizes. He thinks Microsoft will plan a similar proprietary device, but that the intellectual property on such technology that Gemstar accumulated with its January acquisitions will pose barriers. Gemstar, a Pasadena, Calif. company which had revenue of $73 million in 1999, has already proven its mettle in hoarding patents for VCR Plus technology, which allows television viewers to automatically program video cassette recording. Gemstar officials couldn't be reached for comment Tuesday. -Christine Nuzum; Dow Jones Newswires; 201-938-5172