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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: alburk who wrote (35922)	12/4/2000 6:21:51 AM
From: Larry Grzemkowski	Respond to of 54805

Hi Andrew & Mike I believe that Gemstar is in the early stages of its revenue built up and I say that based on what is happening here in Wisconsin. Time Warner is just offering digital cable which will have IPG and the regular cable for TW just rearanged all their channels and put TV Guide on Channel 23 so that all channel surffers will see it. TV Guide used to be on channel 99 where no one saw it. I did not even know it was there until I came across it by mistake one day. So the point is there are efforts being made to put TV Guide in peoples faces so they see the adds. Larry G

To: alburk who wrote (35922)	12/4/2000 8:48:48 AM
From: Mike Buckley	Respond to of 54805

Andy, It seems that neither the July 13 Robertson Stephens report or the November 21 Deutsche Banc Alex Brown report project any where close to tornado like growth in licensing revenues over the next 3 years. More like 30-35% yearly. (Lehman too) That's interesting. That must be a huge disappointment to all the people around here who (wrongly in my opinion) proclaimed Gemstar a Gorilla a long time ago and to all the people who keep thinking the tornado is just around the corner. Is this the measure your using? If you're referring to IPG licensing, yes. If you're referring to those reports, I haven't seen them. Without the advertising revenue growth, I would think GMST will disappoint. I guess it depends on what you mean by "disappoint." Very recently I saw the first compelling piece I've seen that might help us arrive at fair value for the stock. The piece proposed that the ratio of price to EBITDA is about the same or less than the expected growth in EBITDA. Lacking earnings, that's a rational approach to valuing the stock. If that relationship continues, I don't understand how the stock could be a big disappointment. There's no question that my focus is on the IPG licensing revenue and the advertising revenue. If both don't eventually come through in a big way I would be disappointed. Do you view the advertising revenue tornado as a given provided that GMST dominates the IPG market as anticipated? (Even though early growth may be inconsistent) No, the only thing I consider a given is the past. :) As I mentioned in an earlier post, the nature of new, targeted advertising is so unproven that I don't think it's reasonable to assume it's a given. With ad rates falling for the Internet and with no current system in place for measuring viewing the ads on an IPG, the only person who knows what's going to happen is the guy who owns the crystal ball. And especially since I think the real advertising value of the IPG comes into play when we have at least 300 channels and some sort of convergence of television and the Internet (neither of which will be in place for awhile), I think a lot is still up in the air. --Mike Buckley