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News and Press Releases |
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SETTLEMENT "OR" DISMISSAL:
Settlement Removes Cloud Over Gemstar
By: Debora Vrana
Los Angeles Times. February 13, 2004
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EXCERPT: Gemstar-TV Guide International Inc. has settled a group of shareholder lawsuits for $67.5 million in cash and stock, the publisher of TV Guide magazine said Thursday, the same day a federal appeals court revived the company's patent suit against a competitor. Both events were considered welcome news for the troubled Hollywood-based company, which is facing a federal investigation into accounting irregularities. Analysts noted that the settlement amount, though large, lifts at least one of the clouds hanging over Gemstar. "This really helps the company focus on the business going forward," said April Horace, an analyst at Janco Partners Inc. "They really inherited these shareholder suits from the previous management." The company settled the consolidated shareholder suits for $42.5 million in cash and 4.1 million shares of stock valued at $25 million. It wouldn't reveal how many shareholders were included in the settlement or how much they would receive. "This settlement is a significant step in Gemstar-TV Guide's efforts to resolve the legal issues that have faced the company," Jeff Shell, who became chief executive in 2002, said in a statement. "As we put the issues related to past management behind us, the new executive team can focus more completely on maximizing the opportunities for growth and development in front of us." The settlement of the suits, which were filed in federal court in Los Angeles and related to alleged accounting and financial reporting improprieties at Gemstar, didn't resolve other shareholder suits or securities fraud cases still pending against the company, Gemstar said. Last month, the Securities and Exchange Commission filed suit against three former Gemstar executives, alleging they participated in a "widespread and complex scheme" to inflate revenue and mislead investors. The SEC filed a similar complaint in June against Henry Yuen, Gemstar's founder and former chief executive, and Elsie Leung, its former chief financial officer. They were ousted in 2002 after Gemstar's accounting scandal came to light. When the scandal wiped out billions of dollars of shareholder value, News Corp. took control of it.
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