In an effort to stem the free-fall in its stock price over the past two days,
Gemstar-TV Guide International Inc. chairman Henry Yuen held a conference call
with analysts aimed at alleviating investor fears.
During the call, Yuen stressed that despite investor concerns about the
advertising market in the aftermath of terrorist attacks in New York and
Washington, D.C., Gemstar is on track to meet its third-quarter guidance.
The pep talk appears to be working. After losing more than 32 percent of its
value between Sept. 10 and 18 -- when the stock fell from $25.44 per share to
$17.28 -- Gemstar stock was up $1.87 per share Wednesday, closing at $19.15.
Yuen said Gemstar's technology and licensing sector would not be impacted by
the tragic events of last week and should report strong year-over-year growth in
the third quarter. Any advertising revenue lost in its interactive-platform
sector would be offset by better-than-expected performance prior to the events
of last week, he added.
Most of Gemstar's ad contracts are locked in, Yuen said, with rate-card
advertising -- which is subject to adjustment -- accounting for only 5 percent
of overall revenue.
Of that 5 percent, he added, a small percentage is expected to be lost,
probably in the single-digits.
Performance at the company's magazines and TV Guide Channel was hurt, though.
Yuen said ratings for TV Guide Channel dropped 'drastically' as viewers turned
their attention to news programming.
But he added that performance at both the magazine and the network was better
than expected prior to the Sept. 11 disaster.
'Generally, we don't believe Q3 will be impacted at all on an overall or on a
sector basis,' Yuen said during the conference call. 'We have strong positive
cash flow and a very strong cash position. We feel that our stock price is
unfairly positioned at this point. This is probably because of a lack of
understanding of our real business.'
Gemstar backed up that claim with its own money, authorizing the repurchase
of up to $300 million of its shares.