Gemstar-TV Guide Attracting A String of Class Action Suits
Updated: Friday, April 19, 2002 4:12 PM
Posted: Wednesday, April 17, 2002 4:27 PM
Gemstar-TV Guide became part of its eighth class action suit in two weeks on Tuesday. The parent company of the TV Games Network is being sued for allegedly misrepresenting its financial results for 2001 and giving the illusion that earnings growth was in line with analysts' expectations.
Specifically, the company is accused of failing to disclose that $20.8 million of $101 million in advertising revenue associated with its interactive television program guide came from a barter arrangement with Fantasy Sports, an operater of fantasy sports leagues. Gemstar also included in last year's $327 million total for technology and licensing revenue $58.9 million that will only be realized if the company wins a pending patent infringement suit with Scientific-Atlanta.
The discrepancies were not reported during the company's fourth quarter or year-end results and the stock continued trading for around $20. They were disclosed at the beginning of April in Gemstar's annual report and the stock immediately fell from $14 to $9 per share, which was the lowest price in three years.
"Due to the defendants' deceptive and illegal conduct, plaintiff and other class members purchased and/or acquired their Gemstar securities at inflated prices," stated one suit.
Gemstar said the company plans to "vigorously defend" itself against the suits and related actions. The technology and media company added it is in full compliance with securities laws.
The suits were filed on behalf of investors who owned Gemstar-TV Guide stock between Aug. 11, 1999 and April 1, 2002.
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