Gemstar-TV Guide (GMST) says that is may put itself up for sale. As would be expected, shares jumped 17% after hours to $6.27. That would put it well above its 52-week high and up over 100% for the year.
Rupert Murdoch’s News Corp (NWS) owns 41% of the company, so he may be in for a nice pay day.
The question about Gemstar is whether it is a good business. Revenue in Q1 was up from $144 million to $157 million. The company’s technology unit which sells electronic channel guides to set-top box, cable, and satellite companies does very well. In the first quarter, it had EBITDA of $54 million on revenue of $75 million. The company’s ad sales unit also did well, with EBITDA of $9 million on $48 million revenue.
But, the company’s publishing business is awful. In Q1, on revenue of $34 million, the unit lost $6 million.
The best way for the company to make shareholders money is probably to get out of the publishing business. The balance of the firm does just fine.
Douglas A. McIntyre can be reached at [email protected]
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