Macrovision-Gemstar Deal Worries Analysts
SAN FRANCISCO -- Investors and analysts were so unsettled by Macrovision's (MVSN) announced merger with Gemstar-TV Guide (GMST) that one sell-side analyst pulled his rating on Macrovision late Friday, while others noted the risks of the deal.
Noting that Macrovision had already announced two small acquisitions within a month of the deal, William Blair analyst Ralph Schackart called it a "bet-the-company transaction" when announcing his decision to suspend the rating.
He put integration risks at the top of his list of concerns for Macrovision, a developer of software that is sold to movie studios and video device manufacturers to protect movies against piracy. Macrovision is an investment-banking client of William Blair.
Macrovision, which fell 21.4% on Friday, declined another 4.45%, or 91 cents, to $19.53 in early trading on Monday. Meanwhile, Gemstar, which slipped 16.6% on Friday, declined another 6.81%, or 34 cents, to $4.65 in early trading on MondayMacrovision investors who had had "a good feeling about the near-term numbers" fled the stock over disappointment that healthy returns will be delayed for years, said Piper Jaffray analyst Mike Olson. Olson, whose firm makes a market in Macrosvision, notes the deal presents "huge potential opportunities, but huge potential questions." Santa Clara, Calif.-based Macrovision is paying $2.8 billion for Gemstar-TV Guide, which is based in Los Angeles. Under the terms of the deal, the companies will become subsidiaries owned by a holding company under Macrovision leadership. The combined entity is expected to generate $914 million in revenue in 2008 and net income, excluding items, of $186.3 million. Gemstar is expected to contribute about 70% of the top line.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV