Gigamedia has an excellent quarter and sparkling future.
20 Stock Portfolio member Gigamedia (GIGM: 3.27 +0.01 +0.31%) released 3rd quarter earnings before market open and the results were excellent. Revenue was up 76% YoY and net profits up 49%. The historically weak 3rd quarter improved on Q2 numbers. Revenue and profits were above analysts estimates (not that I care much).
The exciting news is the future possibilities, but first the core European online poker business Everest Poker had record results increased revenue 163% from a year earlier. What gets me excited is the Asian gaming side of the business is just getting started with slower than expected revenue streams for the quarter and the Japanese games including Pachinko will not get fully rolling until early next year. Adding to the future possibilities GIGM is teaming up with Electronic Arts (ERTS: 17.90 +0.01 +0.06%) to offer online versions of EA’s games to Gigamedia’s Asian customers.
GIGM is still a small, fast growing company. Revenues are under $200 million annually and market cap around $1 billion. I do not see any reason why this company cannot be a $1 billion revenue company soon. At a 50% growth rate that number comes in less than 5 years. Gigamedia’s stock is highly volatile as short term traders push the price around. At this point I see any price pull back into the teens as a buying opportunity (until it cracks $30!).
Note: Take a look at my 20 Stock Articles page to see earlier posts.
Note squared: I own shares in GIGM.
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