Gemstar TV Guide International Inc. stock fell more than 10 percent Thursday
after the company released preliminary unaudited second-quarter results showing
that its losses increased seven-fold to $953.8 million, or $2.32 per share,
compared with a loss of $134.8 million (33 cents) last year.
Revenue for the quarter was down 15 percent to $271.7 million from $320.5
million. Gemstar stock was at $2.90 each in 4 p.m. trading Thursday, down 34
cents per share, or 10.4 percent.
Gemstar said the loss was due mainly to a $1.3 billion asset-impairment
charge the company took in the second quarter to reflect the decline in asset
value associated with the acquisition of TV Guide Inc.
Gemstar delayed its results while its audit committee investigated the
allocation of revenues between its interactive division and media and services
That investigation, completed this month, did not recommend any further
changes to Gemstar's financial statements other than the reclassification of
$2.7 million in advertising revenue from its interactive division to its media
and services division.
Gemstar hasn't yet filed an audited 10-Q quarterly statement with the
Securities and Exchange Commission regarding its second-quarter results due to a
dispute with its auditors, KPMG International.
Because of that failure, Gemstar faces delisting from the NASDAQ stock
exchange. The company was appealing that move in a hearing scheduled for
Thursday. However, Gemstar did not expect a decision from NASDAQ until sometime
Gemstar has also asked the SEC's chief auditor for guidance in resolving the
Gemstar has been under fire since April, when it revealed that since the end
of 1999, it had recognized $101.7 million in revenue from Scientific-Atlanta
Inc. that it never received.
At the time, Gemstar said it would reverse the recognition of about $20
million in 2001 revenue from its TV Guide subsidiary, which will likely reduce
the cash flow for its interactive-platform subsidiary by the same amount.
Gemstar disclosed in April that the $20 million that had been booked as ad
revenue was actually noncash, coming from barter deals the company cut with
Fantasy Sports last year.
Gemstar suspended the recognition of the S-A
revenue and recorded a full reserve of $113.5 million in cash against
outstanding receivables from the equipment vendor.
That decision drove down cash flow in the second quarter to negative $54.2
million, compared with positive cash flow of $108 million last