More Troubles for Gemstar

It appears that Gemstar is suffering from a great deal more than poor sales of its ebook devices, REB1100 and REB1200. Throughout August, Gemstar-TV Guide International Inc. CEO Henry Yuen and News Corp Chairman Rupert Murdoch have battled over the future of Gemstar. In the past two years, shares of Gemstar (GMST) have fallen from a $90-range to a little over $3. Gemstar's devaluation has caused Murdoch's New Corp., which owns 42% of Gemstar, to report a $1.9 billion write-down in just the fiscal fourth quarter, which ended June 30th. Among its various troubles, Gemstar was unable to certify its second quarter financial filing by the SEC's deadline. The delayed filings have caused the Nasdaq to send Gemstar a delisting notice.

Gemstar's financial woes have led the company's board to restructure top management. Although nothing official has been announced, Yahoo! reports rumors that Henry Yuen will be made a "nonexecutive chairman of the company." Thus far there seems to be only one discernible tie between the ebook devices and Gemstar's current trouble-- one of tha auditing practices under review is how advertising of Gemstar products within Gemstar-owned TV Guide was recorded. The majority of the limited advertising for the REB1100 and REB1200 devices was within issues of TV Guide.