long and strong
FYI:
Transcript of GigaMedia 4Q and Full-Year 2006 Financial Results (15 slides) :
http://www.gigamedia.com.tw/downloads/conference/4Q06%20Script-Final.pdflet me quote:
GIGM business unit performance:
Gaming Software Business - CESLThe business unit again delivered all-time highs in revenues and net income.
During the fourth quarter, the business unit generated $19.8 million in revenues, representing 183 percent year-over-year growth and 34 percent growth sequentially. Operating income increased 155 percent from the same period in 2005 and 29 percent sequentially; Operating income margin decreased slightly to 30.3 percent from 31.6 percent in the previous quarter due to increased selling and marketing expenses; net income grew to $5.9 million, a 219 percent improvement year-overyear or 30 percent growth sequentially.
Let me quickly break this down further into results for our poker
software business and our traditional gaming software business.
Our poker business again achieved record results. Revenues from our poker software products were $12.9 million, up 54 percent sequentially.
Poker revenues represented 65 percent of CESL’s total revenues. This
growth was largely driven by the increase in the number of poker players on our platform. Approximately 90,000 active depositing realmoney customers played Everest Poker during the fourth quarter, up 47 percent sequentially. And during the quarter, approximately 43,000 new depositing real-money players were added. Everest Poker user and revenue growth has been driven by efficient, targeted marketing and brand-building initiatives, including high-profile
poker tournaments. During the fourth quarter our licensee kicked off another exciting poker tour – the Everest Poker Nordic Summit, which targets Scandinavian players. Everest also launched its biggest event ever in late December – Avalanche, a $1 million poker tournament that runs through September. Everest and Avalanche are off to a flying start in 2007, positioning our poker software business for what looks to be another great year.
The traditional gaming software business also delivered strong results.
Third-quarter revenues from the traditional gaming software business
were $6.9 million. This represented a 44 percent increase year-overyear
and 8 percent sequential growth. In sum, this business unit continues to scale up rapidly, we believe that there is plenty of growth potential from organic expansion in our target markets and we are confident in our ability to compete successfully in these markets.
Asian Online Games Business – FunTownFunTown accelerated its growth momentum in the fourth quarter,
delivering sharply improved performance. During the period we
continued to execute our strategy to expand our game offerings to
attract new gamers and increase gamer spending through offering an
increased selection of in-game virtual items, and we supported this with
strong marketing initiatives in both the third and the fourth quarter of
2006 to strengthen our brand. As a result of these initiatives, we
accelerated the momentum we started to generate in the third quarter
in our top-line, and experienced a significant improvement in our fourthquarter
operating margin. Revenues in the period increased 16 percent sequentially. Operating margin increased to 35 percent from 27 percent in the previous quarter pushing up net income 48 percent sequentially. EBITDA margin was a
healthy 44 percent. Let me briefly go over a few of the key initiatives in the period. During the fourth quarter we continued strong marketing initiatives which begun in the previous quarter, which included the launch of a large
mass media campaign with television commercials in Taiwan focused
on our leading MahJong offering and traditional board games.
On the product side we continued our program of monthly releases of
new virtual items. As a result, monthly revenue per active paying
account increased 20 percent sequentially to $16.6 in the fourth
quarter. In addition, our newly licensed advanced casual game Tales Runner
continued to increase in popularity. It is now one of the most popular
online causal games in Hong Kong and is gaining traction in Taiwan.
Tales Runner was a meaningful contributor of FunTown’s fourth quarter revenues and we expect its contributions to increase in the first quarter. We also expect to launch two to three newly licensed games in 2007 to further enhance our product offerings.
During the fourth quarter in 2006, we also announced a number of
strategic growth initiatives in the Asian online game sector. Let me
take a moment to review each of these.
First, Hellgate: London. The global launch of Hellgate: London is scheduled for the second half of 2007. We showcased Hellgate: London at last month’s Taipei game show which attracted tens of thousands of gamers. Given the extraordinary feedback we have received, we expect the addition of Hellgate: London to significantly increase our revenues and profitability.
Second, our China platform, T2CN. As stated in our release today, we will begin equity accounting for T2CN in the first quarter. We are in very early stages of building this growth platform and expect near term financial contributions to be relatively modest. However, our focus on sports, our large and already established player-base and our access to a deep pipeline of games through our relationship with Korean developer and operator CJ Internet all position us to deliver significant long-term growth.
Third, our Southeast Asian platform, investment in Infocomm Asia. As this investment will be cost accounted for, we do not expect any immediate direct financial contributions. However, Infocomm Asia further broadens our already unmatched regional footprint, giving us a strong position to secure regional licenses to top online games. We are also well-positioned to develop regional marketing relationships with leading international brands and secure perational leverage through our regional footprint.
Finally, a quick review of our Broadband ISP BusinessOur legacy broadband ISP business delivered another stable quarter.
Increased revenues on the corporate side of the business helped offset
a slight revenue decline on the consumer side of the business, and we
continued strict cost and expense control measures. As a result, we
posted revenue of $5 million and operating income of $1.3 million for the period. We expect the relative contributions of our ISP business to our consolidated financials to continue to decline. Specifically, in the first quarter of 2007, we expect a decline in revenues and decreased profitability in the legacy ISP business as part of the service fees we receive in relation to the sale of our ADSL business will end in the quarter. This is in line with our ongoing strategy of shifting resources away from this legacy business.
To summarize, in 2006 we laid the foundation for a powerful online entertainment platform. We delivered tremendous growth in our gaming
software business, especially in the poker business, and added another high-margin growth engine, our Asian online games business. We are thrilled with where we are now, excited about the opportunities and growth prospects in front of us, and confident in our ability to execute and continue to deliver. 2007 promises to be a very exciting year, and we look forward to sharing it with you as we continue to grow shareholder value.
I am also thrilled
cheers from SG
Oliver
