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

To: Drake who wrote (3483)	7/28/2000 1:16:55 PM
From: Allegoria	Read Replies (1) \| Respond to of 6516

I have to admit that the SFA thread is another useless thread here on SI. I post and post but few takers, so I decided to respond to your question. Since I have only DD on my side, I do not pretend to be any expert. But here goes: The industry understands that SFA and MOT (via GIC) currently have a 'dual'opoly on the set-top market. (Ref: multichannel.com ). I understand this statement is going to make a lot of people flame away…(notably CMTO and others)… McIntyre, Scientific-Atlanta's chief technology officer said the company sees digital set-top box penetration reaching as high as 70% to 80%, based on information it has gotten from cable operators. SFA announced that it is raising production capacity of its flagship Explorer set-tops to 1.3 million boxes per quarter, to meet the explosion in demand. Of interest to our discussion is the fact that SFA also has a very interesting division called PowerTV. The just released earnings (fantastic by the way!!!) showed PowerTV has sold 2.5 million (and 3 million on order!) licenses for its set-top "O/S", giving it a formable foot print in the O/S battle. PowerTV further strengthened its leading position in software solutions for digital interactive systems which is something that MOT is lagging badly in. . Additionally, PowerTV Inc. recently took over PRASARA Technologies Inc. and they have just completed the transaction to merge their operations. Now PRASARA brings complementary interactive application and back-office technology to PowerTV. The combined entity will be better positioned to meet customers' needs with broader and deeper offerings. The combined companies plan to offer an open, end-to-end software solution for interactive television capable of running on any broadband delivery network, any server solution and any cable TV digital set-top. PowerTV's product line includes a middleware layer with an HTML engine and support for PersonalJava. PowerTV's SofaSOFT(TM) suite of interactive TV services therefore, enables consumers to browse the Web, compose email and use other services while watching TV… As noted earlier, the MSO's are NOT happy to simply deploy set-top boxes and forget them. IMHO, they are NOT going to relinquish "total" control of the set-top. Not to GMST, not to SFA, not to anyone. This is where the money is. "PRASARA, with their tremendous background in interactive TV, provides an incredibly attractive set of applications and business management tools that significantly enhance cable operators' competitive position." So now SFA has the tools in its "O/S" that the MSO's want. The EPG is but one aspect of the total package, and the MSO's know this. So PowerTV is seen as an insider by the MSO's…almost a partner helping to share the profits of the eventual "O/S" (what the heck can we call this thing anyway…). Consequently, SFA has long talked about spinning off PowerTV so as to present another alternative for the MSO's. I hope I have helped somewhat. (Note I am long SFA, and sold a while back my GMST. I am looking for a re-entry point for GMST). Good luck, Eric