Gemstar Stock Gain Fuels AOL Deal Talk

After Gemstar International Group shares hit a 52-week intra-day high Thursday, some on Wall Street are speculating that the Pasadena company may be close to striking a deal with America Online.

Gemstar makes technology for interactive TV program guides, and it has already attracted the attention of such media heavyweights as Microsoft and NBC. Gemstar’s shares rose as high as $80.50 in Nasdaq trading before closing at $78.44, up $3.19 for a 4% gain and a record high close.

AOL, the world’s largest online service provider, is known to be looking for ways to extend its reach beyond computers. Analysts said a licensing deal with Gemstar would provide key technology to AOL if it were looking for an entry into TV. (Some Wall Street rumors had AOL interested in buying Gemstar, but analysts say an acquisition would not make sense.)

AOL officials wouldn’t comment about the speculation. Sallie Manson, a Gemstar spokeswoman, said the two companies have talked in the past but that she wasn’t aware of any new discussions.

Analysts said Gemstar’s rising stock price could also reflect optimism that the company will settle a long-standing patent dispute with rival TV Guide Inc. of Tulsa, Okla., which has its own interactive programming guide technology. The companies negotiated for nine hours Wednesday in court-ordered talks. Shares of both companies rose 18% on Wednesday even though no agreement was reached.