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Gemstar Slump Expected to Persist

May 16, 2003|Sallie Hofmeister | Times Staff Writer

Gemstar TV-Guide International Inc. still is in decline and may not turn around until 2004 or 2005 because of upcoming investments needed to restore the company to health, top management said Thursday in announcing first-quarter results.

The Hollywood-based company plans to invest as much as $60 million over the next three years to redesign its three key products: TV Guide magazine, its electronic programming guide and the TV Guide Channel, said Gemstar Chief Executive Jeffrey Shell.

TV Guide, which accounts for the bulk of the company's revenue, has been suffering from eroding circulation over the last two years as people have turned to newspaper listings and on-screen navigational guides to make their viewing choices. The declines at TV Guide continued in the first quarter. Though sales from advertising were up, those from circulation fell as Gemstar sold more copies at discount rates.

As a result, Gemstar's revenue fell by 13% in the quarter. Revenue was $227.9 million, down from $260.5 million in the first quarter of 2002.

The company, however, narrowed its losses to $45.4 million, or 11 cents a share, for the quarter, down from a loss of $270.9 million, or 65 cents, in the same period a year ago. Last year's loss included a $223.2-million write-off related to new accounting rules.

Shell said the company also suffered from ballooning legal expenses from an ongoing Securities and Exchange Commission investigation into the company's accounting practices, shareholder lawsuits and court battles defending its patents. In addition, its C-band satellite business continues to decline.

Shares of Gemstar closed up 6 cents at $4.18 on Nasdaq.

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