Gemstar to Restate Its 2001 Results
Gemstar-TV Guide International Inc. on Wednesday delayed the release of its second-quarter results, announced it would restate financial statements for last year and signaled a management shakeup ahead.
The move, coming on the deadline for top executives to personally certify their company’s financial statements, offered yet another sign of trouble at Pasadena-based Gemstar, which publishes TV Guide magazine and produces electronic TV program guides.
The company said it intended to restate 2001 earnings by reducing revenue from its TV Guide subsidiary by about $20 million. Gemstar said its audit committee also is reviewing revenue accounting practices for “certain other transactions” and the allocation of revenue among its interactive-platform division and media-and-services division.
In a step Gemstar described as unrelated to the financial restatement, Chief Executive Henry Yuen and News Corp. have submitted a joint proposal to Gemstar’s board to restructure the company’s management. The proposal includes a settlement of disputes between the parties, Gemstar said.
The restructuring probably will show that News Corp., which last year doubled its stake in Gemstar to 44%, is taking an even more active role in managing the company and trying to halt the decline of its investment. News Corp. was forced to take a $2-billion write-off in March on its investment in Gemstar because of a drop in value.
Gemstar said it was delaying its second-quarter results after concluding that collecting money from Scientific-Atlanta Inc. in a patent dispute is no longer assured, and added that it would record a full reserve. In June, an administrative law judge ruled that Gemstar had misused one of its patents and could not recover damages from Scientific-Atlanta, which Gemstar accused of infringing its patents.
Gemstar’s stock has slipped steadily among questions of aggressive accounting, court challenges to its dozens of patents covering electronic program guides and slipping confidence in Yuen and his management team.
Gemstar shares fell 33 cents to $3.34 on Nasdaq.
