Gemstar Records 91% Boost in Profit, Eyes TiVo

Gemstar International Group Ltd., which is buying TV Guide Inc. for $9.2 billion, posted a 91% jump in profit for its fiscal fourth quarter, much better than analyst forecasts, on higher sales of its VCR Plus television software.

The Pasadena-based company also said Wednesday that it would be interested in a “transaction” with TiVo Inc., which sells a device to digitally record TV shows.

Henry Yuen, Gemstar’s chairman and chief executive, said he hadn’t made a formal offer to buy TiVo, which has a market value of $733.6 million. Gemstar’s lawsuit against TiVo, for allegedly selling a video recorder with an interactive TV listing without Gemstar’s permission, wouldn’t preclude an acquisition, he said.

Gemstar also will spend as much as $1 billion to buy small stakes in interactive-TV providers over the next two to three years after completing the acquisition of TV Guide, said Yuen, Gemstar’s No. 2 shareholder. That’s a change from Gemstar’s previous strategy of buying only controlling stakes, he said.

He declined to identify other companies in which Gemstar might invest.

“We would like to put in place investments in our sector. We want to nurture things,” Yuen said in an interview. “We really are talking about hundreds of millions of dollars, even pushing the billion mark.”

TiVo hasn’t held acquisition talks with Gemstar, TiVo spokeswoman Susan Cashen said. Gemstar will acquire a 1% stake in San Jose-based TiVo after buying TV Guide, which acquired the stake for about $2 million before TiVo first sold stock to the public in September, she said.

“We appreciate their interest, and the reality is that we haven’t been in discussions,” Cashen said. “Anything is possible, but that is something that is not currently in the works at all.”

In its earnings report, released after the markets closed, Gemstar said profit from operations grew to $42.3 million, or 17 cents a share, for the period ended March 31, from $22.2 million, or 9 cents, a year earlier, on a 52% surge in sales to $84 million. Last year’s figures were restated to reflect two acquisitions.

The company was expected to earn 14 cents a share, the average estimate of seven analysts polled by First Call/Thomson Financial. Gemstar’s sales also exceeded separate analyst forecasts of $64 million and $65.4 million.

TiVo shares rose 38 cents to $19.38 in Nasdaq trading, after earlier touching $20.75.

Gemstar, which soared $7.81 on Tuesday, added 13 cents to $42.44, while TV Guide fell 27 cents to $25.73, also on Nasdaq.