Embattled TV programming-guide provider Gemstar-TV Guide
Additionally, former CEO Henry Yuen and CFO Elsie Leung have agreed to testify before the Securities and Exchange Commission sometime within the next few weeks. Yuen and Leung stepped down in ignominy last year after Rupert Murdoch's News Corp.
But the real bombshell came last summer. Gemstar sued former customers Scientific Atlanta
After News Corp. essentially assumed management control of Gemstar, the company fired the original auditors (who did what?!) and began reviewing past accounting. This announcement marks the second restatement this year. This is to be expected, as a company that has played aggressively in one area, generally speaking, has shaded the laws of GAAP and common sense elsewhere, as well. There may be more restatements.
Plenty of folks for whom I have deep respect call Gemstar a bargain these days. Certainly, the fact that they've dumped their shady management team improves the company's suitability for investment alone, and TV Guide, despite improvements in digital programming data, remains a cash cow. But I'm a little concerned that Yuen and Leung remain employees of the company at all, and that Leung remains on its board of directors. In fact, the company yesterday expressed "disappointment" that the SEC had to enforce a subpoena on Yuen and Leung, who were instructed by the company to cooperate.
The story's not over yet, and more may be found in Gemstar's receivables cesspool that will cause shareholders pain. Gemstar, at this point, is a poster child for the motivation for executives to lie, cheat, and steal. After all, unless Yuen is thrown in jail or stripped of his stock (both highly unlikely), he will still be unbelievably rich, based in no small part on his ability to lie.