Gigamedia Online Gambling Operations Solid

Published Friday, July 31, 2009 -

Gigamedia runs two primary businesses, both focused on online gaming. The first is a Gaming Software & Services, organization that develops and licences software and application services aimed at online casinos and poker primarily for the European market. This portion of the business makes over 70% of the sales. The major licensee is Ultra Internet Media (UIM), which has developed Everest Poker and Everest Casino, two of the more well known online gambling operations in the industry. The other part of Gigamedia's holding company is the Online Gaming and Services division that generates approximately 25 percent of the revenues for Gigamedia. This section is divided into two subsidiaries, first is FunTown, a Taiwan facing operation that offers a wide variety of games with almost 12 million registered users. The other online gaming subsidiary is T2CN, a huge, with over 70 million users, China-based business that focuses mainly on sports games.

Gigamedia previously ran a number of Internet service providers, but left them behind in September 2008, focusing all of it's business on online gambling. Gigamedia has been very productive in recent years with impressive growth and good financial numbers. With Everest Poker striking a lucrative deal with the World Series of Poker, the company is still looking at plenty of opportunities for future expansion. Sales generated showed an annual growth of 38 percent and operating profits at 67 percent since 2004.

Online gaming is really coming on strong in Asia, and Gigamedia is well positioned to capitalize on the trend. FunTown and T2CN continue to perform well. The 13% earnings yield, and a strong business model with plenty of room for expansion Gigamedia is a powerhouse in the stock market. Uncertainty is always something to consider when investing in a company and Gigamedia seems to thrive on just that. It's management is a little unclear about it's future direction with rumours that it will try to focus more on the volatile and competitive Asian market, even as it's online casinos are doing almost 70 percent of it's business. It's a wait and see approach with Gigamedia and to be sure it does have a good track record.

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