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

To: NY Stew who wrote (4331)	11/27/2000 9:46:08 AM
From: straight life	Read Replies (1) \| Respond to of 6516

Gemstar-TV Guide and ICTV Announce Integration Agreement Integration Of ICTV's Browser And TV Guide Interactive Provides Operators With A Complete, Working Solution For New Revenue Streams biz.yahoo.com LOS GATOS, Calif. & TULSA, Okla.--(BUSINESS WIRE)--Nov. 27, 2000-- Gemstar-TV Guide International Inc. (Nasdaq: GMST - news), developer and licensor of TV Guide Interactive -- the leading digital cable on screen guide, now in 5 million homes -- and ICTV, supplier of the most powerful browser available to all digital set tops, today announced that the two companies have completed an integration agreement. The resulting solution, which allows simple switching between TV Guide Interactive to various ICTV applications, will be demonstrated at this year's Western Show. ``Integration of the two products provides MSOs with a real solution to quickly and easily add the leading Interactive Program Guide, an e-mail client, T-commerce and broadband content -- ranging from walled garden to fenced prairie to open Internet access -- into their systems currently in the field without out ordering a truck roll,'' said Robert Clasen, CEO, ICTV. The integrated system will work with any GI set top, including DCT 1200s and 2000s. ``This is a great step forward,'' said Wesley O. Hoffman, president of ICTV. ``MSOs have been looking for a way to offer a service that provides strong competitive differentiation while driving cash flow growth. With TV Guide Interactive integration, we can drive Broadband TV content and applications on any Motorola set top. MSOs don't need middleware of any kind to deploy a suite of solutions which, according to industry analysts, represent combined revenue potential in excess of $20 per sub per month.'' Toby DeWeese, TV Guide Inc.'s vice president of Corporate Development believes TV Guide can build significant additional revenue by leveraging the Broadband capabilities of ICTV's platform. ``Advertisers are clearly willing to pay more for targeted ads that capture a consumer's attention and hold it. We know we can build these sorts of advertising solutions using rich media with interaction and streaming video or audio. With ICTV at the headend, we can build these solutions and integrate them as extensions of the campaigns we initiate in our Guide. It's potentially very powerful.'' About Gemstar-TV Guide International Inc. Gemstar-TV Guide International Inc., (Nasdaq: GMST - news) is a leading global technology and media company focused on consumer entertainment. The company has four major business sectors: the Technology and Licensing Sector, which is responsible for the development, licensing and protection of intellectual property and technology; the company's technology includes the VCR Plus+® system, the interactive program guide (``IPG'') marketed under the GUIDE Plus+® and TV Guide Interactive(SM) brands and the electronic book (``eBook''); the Interactive Platform Sector, which owns, operates and derives recurring income from advertising, interactive services, content sales and e-commerce on the company's proprietary IPG and eBook platforms; and the Media and Services Sector, which operates the TV Guide® magazines, TV Guide Channel(SM), and other television media properties, as well as a media sales group that services all of the company's media platforms; and the Investments & Holdings Sector, which operates a variety of businesses including the startup Television Games Network. The IPG is built into televisions, VCRs or set top boxes (cable, satellite, telco, Internet) and presents a multi-day television program guide on the television screen from which the consumer can view, select, tune to or record programs. The eBook is a reading device that can store tens of thousands of pages and permits a user to take instant delivery of any book, magazine or newspaper they purchase over the telephone. The company's media properties reach more than 100 million U.S. homes on a weekly basis. The company's products and services are available in more than 50 countries worldwide. The company's services, technology and intellectual property are licensed to major technology, media and communication companies in the consumer electronics, Internet, personal computer, satellite, cable television and telco industries. Licensees and customers include AOL, AT&T, Cablevision, Charter, Comcast, Cox, DirecTV, Dish Network, Matsushita, Microsoft, Philips, Sony, Time Warner, Thomson multimedia, Zenith and others. The company has more than 140 issued U.S. patents in the general area of audio-visual technologies with more than 3000 claims, more than 150 issued foreign patents, and continues to actively pursue a worldwide intellectual property program and currently has more than 400 U.S. patent and more than 600 foreign patent applications pending with more than 5,000 claims. About ICTV ICTV supplies world-leading communications infrastructure for ITV solutions to network operators. The company's digital ITV delivery platform provides cable operators with a headend-based solution that enables delivery of broadband Internet, email and Interactive TV applications to any digital set top. ICTV's TV Browser, which can be used to support Walled Garden or Open Internet Access applications, is the only open TV Browser capable of supporting diverse sources and types of broadband, streaming media. The TV Browser is uniquely capable of supporting a large selection of rich media plugins such as Real Networks' Real Player, Apple's Quicktime, Macromedia's Flash and Shockwave and Microsoft's Windows Media Player. Any application running on the ICTV platform can run on any digital set top box. The system does not require any sort of middleware application in the set top. Employing a patented frequency reuse solution, ICTV is fully scalable on any two-way HFC cable system. All standard Internet content and applications will work on the ICTV system -- including broadband content requiring large bandwidth or advanced plug-ins. The company has 19 issued patents and 10 patents pending. Investors and strategic partners include ACTV (Nasdaq: IATV - news), Adelphia (Nasdaq: ADLAC - news), Cox (NYSE: COX - news), Lauder Partners, Liberty Digital (Nasdaq: LDIG - news), Motorola (NYSE: MOT - news), OpenTV (Nasdaq: OPTV - news), Shaw Communications (NYSE: SJR - news; TSE: SJR.B - news), and Gemstar-TV Guide (Nasdaq: GMST - news). ICTV can be found on the World Wide Web at ictv.com. -------------------------------------------------------------------------------- Contact: Jeff Rosenberg Public Relations Jeff Rosenberg, 818/709-8270 (for ICTV) jeff@jeffrpr.com or ICTV Catherine Duenas, 408/364-9432 cduenas@ictv.com or Gemstar-TV Guide International Lauren Snyder, 212/852-7585 lauren.snyder@tvguide.com Gary Gamino, 918/488-4336 (Investor Relations) gary.gamino@tvguide.com

To: NY Stew who wrote (4331)	12/3/2000 11:23:43 AM
From: hueyone	Respond to of 6516

Red Herring on Gemstar redherring.com Fish or Cut Bait: A gem of a stock By Paul R. LaMonica Redherring.com, December 04, 2000 Repeat after me. Gemstar-TV Guide (Nasdaq: GMST) is not a book retailer. Gemstar-TV Guide is not a book retailer. Got it? Good. Gemstar-TV Guide (Gemstar) has been in the news quite a bit lately, and for a bizarre reason. The company acquired two e-book companies earlier this year, which gave it a foothold in that still-embryonic business. Since then, Gemstar has talked with book retailer Barnes and Noble (NYSE: BKS) about some sort of strategic alliance to promote e-books. But some silly speculation arose as a result, namely that Gemstar actually wanted to buy Barnes and Noble. If you're a Barnes and Noble shareholder, this scuttlebutt made you happy. The stock has rallied 36.5 percent in the past month, and last Monday Barnes and Noble hit a new 52-week high. (A 52-week high in this market? Imagine that!) But it was just the opposite for Gemstar. Its shares have plunged 42 percent in the past month as investors justifiably wondered why on earth this company would want to spend billions of dollars to get into the notoriously low-margin business of retailing. Is there that much value to be had in peddling Tom Clancy e-books? The acquisition talk was finally put to rest Wednesday when the two companies issued a terse statement saying there were no plans for a merger. Thank heaven that's over, because investors looking at Gemstar should not get caught up in the whole "gee whiz, ain't it cool" factor surrounding e-books in the first place. There is certainly promise in e-books, but right now this business is essentially a rounding error on Gemstar's income statement. Investors should focus instead on Gemstar's core business: that lovable 20th century opiate of the masses known as television. It's the boob tube that makes this stock sexy, and it's why Red Herring selected Gemstar for its Digital Hollywood Index. FOLLOW THE GUIDE So what exactly does Gemstar-TV Guide do? This is a bit of an odd company, a hybrid technology innovator and a magazine publisher. Gemstar bought TV Guide in July, and, as a result, more than half of the company's revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) comes from the TV Guide publishing arm. But this is a mature business and one that is now actually slowing. Gemstar's pro forma revenues in its most recent quarter fell slightly from the same period last year, due to declines on the publishing side -- mainly because TV Guide is cutting its circulation base. (I guess there'll be fewer of those cheesy collectible issues featuring multiple covers with different TV characters floating around in the future. Sigh.) But the publishing business is still a cash cow that can help fund what's really exciting about Gemstar: the patented technology, such as VCR Plus and the Interactive Programming Guide, that it licenses to cable and satellite operators. VCR Plus is now a standard for recording programs and is built into most VCRs and TVs. Gemstar makes money not only from licensing its technology to manufacturers of VCRs and television sets, but also from newspaper publishers, who pay to publish the VCR Plus codes. But the main product investors are pinning their hopes on is its Guide Plus Interactive Programming Guide (IPG). The IPG allows cable and satellite TV customers to navigate through the confusing morass of channels to find, sort, and record programming. About 8.5 million homes already use the IPG, and, according to estimates from SG Cowen, the installed base should increase to 20 million by the end of 2001. Gemstar already has a ten-year agreement with AT&T (NYSE: T), the nation's largest cable company, to provide the IPG to all of its subscribers. BOOMING BUSINESS Revenue from Gemstar's technology licensing and advertising from its IPG increased 43 percent in the third quarter, and now accounts for 21 percent of Gemstar's total revenue on a pro forma basis, up from 14 percent of the total a year ago. And this business is even more important to the bottom line as EBITDA from licensing and interactive programming advertising increased 106 percent from a year ago, now representing 29 percent of total EBITDA, compared with just 18 percent a year ago. Investors, however, have two concerns regarding the IPG. For one, Gemstar is currently suing two makers of set-top boxes for patent infringement: Scientific Atlanta (NYSE: SFA) and Pioneer (NYSE: PIO). It is also suing interactive television company Tivo (Nasdaq: TIVO) and satellite broadcaster Echostar (Nasdaq: DISH), which has investors worried about future adoption of the IPG since it's crucial for Gemstar to have licensing deals with set-top box makers or satellite companies to get to TV users in the first place. But this seems to be a groundless concern. Here's why. In October, Motorola (NYSE: MOT) settled litigation with Gemstar and announced it would pay Gemstar $200 million for the right to install the IPG in its set-top boxes. Motorola, through its acquisition of General Instrument last year, is the market leader in the set-top box market, so its settlement with Gemstar should put pressure on other companies to settle as well if they want to remain competitive with Motorola. There are also worries about whether the big cable companies will ever sign long-term contracts with Gemstar. Currently, AT&T is the only one to have such an agreement with the company. Analysts I spoke to said they are not overly concerned about this issue, since most cable companies have already deployed the IPG to some of their customers; they also note that Gemstar is already in serious discussions with cable giants like Charter Communications (Nasdaq: CHTR), Comcast (Nasdaq: CMCSK), Adelphia (Nasdaq: ADLAC), Cox (NYSE: COX), and Time Warner (NYSE: TWX) in order to license the IPG. "Investors have missed the fact that all of the top ten cable companies are using the IPG over some portion of their set-top boxes already," says Ron Stone, an analyst with SG Cowen. ATTRACTIVE VALUATION Even though the fundamentals look bright, the stock has fallen 63 percent since hitting a 52-week high in March. It now seems reasonably valued, although the valuation is a little confusing to calculate, so bear with me. Since Gemstar is amortizing a large portion of goodwill as a result of the TV Guide deal -- more than $200 million a quarter -- that takes a humongous bite out of net income. So analysts are using EBITDA to value the company. The best way to look at the company is like this. The stock is currently trading at 67 times EBITDA estimates for this fiscal year (ending March 2001) and at 41 times fiscal 2002 EBITDA estimates. These multiples may seem exorbitant, but they're not -- when you look at the company's expected growth rate. Analysts are predicting that EBITDA will increase by 51 percent this year and 63 percent next year. Another reason I like the company is the fact that News Corporation (NYSE: NWS) owns 43 percent of Gemstar. That should bode well for Gemstar's international prospects, as News Corp.'s Rupert Murdoch is angling to create a global satellite broadcasting giant that would certainly need a product like Gemstar's IPG. The bottom line is that this is a widely misunderstood company with incredible growth prospects in its television-related businesses. Forget all the e-book hype and let's stop being so pretentious. We all know there's more money to be made from the tube than from publishing anyway. Regards, Huey