Davis Freeberg

Macrovision Upgraded to Buy, Shares Jump

The problem with them buying Gemstar is that the real value is embedded in Gemstar's years of tax losses. Assuming that the merger goes through, it will be very difficult to spin off these assets for at least two years without invalidating the tax benefits from Gemstar's losses. I suppose that there is always the chance that the merger doesn't go through, but to make a bet that they are going to start spinning off businesses seems pretty foolish given the comments that Macrovision has made regarding the Gemstar purchase.