Deutsche Bank cut Gemstar-TV Guide (GMST) to market perform from buy.
Analyst Karim Zia says the initial determination from an International Trade Commission judge is a negative surprise for Gemstar. She says, in addition to finding none of defendants infringed on the three Gemstar patents in question, the judge found that domestic industry does not exist for patents -- and that makes Gemstar guilty of patent misuse regarding its "121" patent, saying that its "121" patents are unenforceable due to Gemstar's failure to name a co-inventor. She notes Gemstar plans to petition the review; she believes the company faces an uphill battle in obtaining a favorable review. As a result, Zia shifted her valuation methodology and now values shares at $8 a share.