CIBC World downgrades Gemstar-TV Guide (GMST) to hold from buy.
Analyst John Corcoran says the downgrade is due to new information in a 10-K, which was released after the market close on Apr. 1, revealing aggressive accounting treatment. He notes that Gemstar recognized $107.6 million in revenue over the past 29 months from Scientific-Atlanta that it has not received, and about $20 million in non-cash Interpublic Group ad revenue from a barter transaction, potentially distorting its interactive platform growth rates.
While he does not believe Gemstar violated any accounting rules, the 10-K reveals accounting treatment that could have significant implications going forward, Corcoran says.