) to hold from buy.
Analyst Niraj Gupta says he is downgrading Gemstar-TV Guide on a less encouraging near-term opportunity outlook.
He notes, besides its magazine business, the company is expected to invest significant amounts of capital in the TV Guide Channel and other things. He says the pay-off on investments is not expected to be immediate.
Further, he notes the company yesterday said its interactive program guide (IPG) revenues included one-time benefits in the second quarter and third quarter. Hence, the company posted a sequential decline in this business in the fourth quarter, as IPG licensing revenues fell 15% below estimates.
Gupta says this has a material impact on valuation. He cuts his 9 cents 2005 earnings per share estimate to 7 cents.