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CIBC World Cuts Gemstar to 'Buy'


CIBC World downgraded Gemstar-TV Guide (GMST) to buy from strong buy.

The company posted a net loss and says that co-president and co-COO Boylan will resign. Analyst John Corcoran says he downgraded for five reasons: 1) the shift in Technology & Licensing revenue mix puts more pressure on the company to expand its service provider Interactive Program Guide (IPG) footprint; 2) the IPG ad platform will lag more established media in an advertising recovery; 3) Gemstar's 2002 "base case" guidance was weaker than expected; 4) limited visibility on the timing of catalysts; 5) he has difficulty justifying valuation multiples that he assigned to growth units of the company.

Corcoran cut the $1.43 billion 2002 revenue estimate to $1.24 billion, and cut the $554 million EBITDA to $471 million. He also trimmed the $37 target to $25.


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