Expected Gemstar Shift Boosts Stock

Gemstar-TV Guide International Inc. shares rose 31% on expectations that a new chief executive will change strategy at the maker of software to run on-screen television program guides.

Shares of the Pasadena-based company rose $1.11 to close at $4.65 Friday on Nasdaq. Gemstar’s stock has fallen 43% since June 21, when the company lost a legal dispute over patents related to its program-guide software.

Rupert Murdoch’s News Corp. owns 42% of Gemstar, which also publishes TV Guide magazine, and wants to replace Gemstar Chief Executive Henry Yuen, sources said. Yuen has relied too heavily on patents and the threat of patent lawsuits to get customers to license his software, investors said.

A Gemstar spokeswoman declined to comment.

Gemstar said Wednesday that it will delay reporting second-quarter earnings and restate 2001 earnings. The company said it’s no longer assured that it can collect money it has claimed that Scientific-Atlanta Inc., a maker of TV set-top boxes, owes in licensing fees. Gemstar lost a patent dispute to Scientific-Atlanta before the U.S. International Trade Commission in June.

Gemstar previously had recorded as revenue more than $100 million that it claimed Scientific-Atlanta owes. Gemstar said it will record costs of the litigation as an expense. It previously had capitalized those costs as a long-term investment.

The company also said it will remove about $20 million in revenue it had recorded from its TV Guide division in last year’s financial results. It said the audit committee of its board is examining whether the company properly recorded revenue in other transactions.

Yuen and Chief Financial Officer Elsie Leung filed statements with the Securities and Exchange Commission on Wednesday saying they were unable to certify the company’s past financial statements. A new SEC rule required chief executives and finance chiefs to file sworn certifications of financial reports by the deadline Wednesday.

Murdoch wants to replace Yuen with Gemstar Chief Operating Officer Jeff Shell, a former head of News Corp.’s Fox cable TV networks, the person familiar with the situation said. Shell couldn’t be reached for comment.