Gemstar dips after questions over filing

Co. confident in winning Scientific-Atlanta lawsuit

By JILL GOLDSMITH

Shares of Gemstar plunged nearly 40% on Tuesday as skittish investors questioned several accounting items in the annual report the company filed with the Securities & Exchange Commission late Monday.

Several analysts pointed out that Pasadena, Calif.-based Gemstar has booked more than $100 million in noncash revenue over the past several years from a licensing deal with Scientific-Atlanta -- which uses Gemstar Interactive program guide technology in its set-top boxes. The problem is, Gemstar has been in ongoing litigation with Scientific-Atlanta and hasn't received that cash.

In a hastily called conference call Tuesday, Gemstar topper Henry Yuen insisted that the firm's auditors had signed off on the figures, that the company Is confident in winning the lawsuit and that the risk of noncollection is exceedingly small.

Big-name clients

Yuen also sought to reassure investors that $20 billion the company booked in ad revenue from a so-called barter transaction was a minimal sum, and that the interactive program guides had attracted a host of blue-chip advertisers including Pfizer, Chrysler, Bose, Domino's Pizza and Listerine.

Shares fell 39¢ to close at $9.01 --- a precipitous drop from a 52-week high near $50.

Gemstar dragged shares of major investor News Corp. down with it. News stock was off 4.09% to $26.98.