GIGA BEATS WALL STREET PROJECTIONS

14 March 2008

Poker business a major contributor


Taiwan-based online gaming software firm GigaMedia Ltd posted fourth-quarter results that beat Wall Street expectations this week, driven by continued growth in its online poker software business in continental Europe and Internet games business in Asia.

Giga reported a 77 percent rise in full year revenues to $166.9 million, compared with $94.3 million in 2006. The company said the Everest Poker division of the business had grown 116 percent during 2007 while its Asian games business provided has grown 75 percent.

GigaMedia said it expected Everest to continue to enjoy the strong revenue growth during 2008 thanks high levels of investment, an expanded product offering and a strengthening of the brand. Current trading for the first two month of 2008 was up around 12 percent on the same period last year.

Total revenues for GigaMedia’s online gaming business were $119 million for 2007, compared with $55 million in 2006. Poker income climbed 190 percent to $89.7 million, from $31million in 2006, while casino revenues grew 20 percent to $29 million, compared with $24 million last year. The company said Everest Poker had performed outstandingly throughout the year, enjoying strong organic growth and benefiting from end-of-year seasonality.

Operating income rose 125 percent to $37.7 million, from $16.8 million in 2006; operating margin rose to 31.7 percent in 2007, compared with 30.5 percent in 2006. EBITDA improved 115 percent to $38.6 million from $17.9 million in 2006.
Revenue in the core gaming software segment rose 73 percent to $34.2 million from the year-ago quarter. The company's poker software business, which rose 107 percent from the previous year, contributed about 78 percent of the gaming software segment's revenue in the quarter.

Earlier in the month, GigaMedia's Everest Poker offering secured a multi-year promotional agreement with the World Series of Poker, the world's largest land-based poker tournament (see previous InfoPowa report). However, financial details of the deal were not disclosed.

Fourth-quarter revenue in the Asian online games segment increased 92 percent to $10.1 million.

Net income for the quarter rose 8 percent to $10.7 million, compared with $9.9 million a year ago. Consolidated revenue increased 59 percent to $47.7 million.

The company expects revenue to climb sharply in 2008 in its Asian online games business boosted by new games launches. The company also forecast continued strong revenue growth in its gaming software business in 2008.

GigaMedia disclosed it has retained financial advisors to assist with the disposal of its broadband Internet service provider business unit and remains in discussions with potential buyers concerning sale of the business.

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