agreed to pay $67.5 million in cash and stock to settle some shareholder class action suits over the accounting misdeeds of previous management.
The settlement represents the latest effort by its
-led turnaround team to break with a troubled past. Gemstar said it will pay the plaintiffs $42.5 million in cash and issue 4.1 million common shares valued at $25 million.
The company also set a big writedown of its struggling
magazine. Shares in the maker of interactive programming guides rose modestly Thursday morning, adding 13 cents to $7.13.
"This settlement is a significant step in Gemstar-TV Guide's efforts to resolve the legal issues that have faced the company," said CEO Jeff Shell. "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."
Gemstar-TV Guide said it will take a fourth-quarter $67.5 million pretax charge on the settlement. It also plans a $400 million charge to write down goodwill and intangible assets related to its bubble-era acquisition
Gemstar is trying to spring back from a plunge that started during the tenure of longtime CEO Henry Yuen. Yuen stepped down in 2002 under pressure from leading shareholder News Corp., amid a spate of governance and financial issues. Gemstar has twice restated past results to fix accounting issues, and last June the
Securities and Exchange Commission
sued Yuen and former financial chief Elsie Leung, alleging they engaged in "a widespread and complex scheme to inflate Gemstar's licensing and advertising revenues."
Since then the company has focused on fixing its accounting and relaunching
, which was redesigned for the first time in a decade last September. Only last fall did Gemstar resume providing financial guidance to Wall Street. The company said in November that it expects a
modest fiscal 2004 profit, excluding legal costs.
Aside from the lawsuits, Gemstar's operational problems underscore the unfulfilled promise of the interactive program guide business, which investors had hoped would turn the company into an advertising powerhouse.
Gemstar noted Thursday that its settlement doesn't resolve related shareholder derivative suits or nonconsolidated securities fraud cases pending against it.