Everest performance drags GigaMedia to US$2.4m loss
A 26% decline in revenues from its European-facing poker and casino arm was largely responsible for dragging GigaMedia to a third-quarter loss of US$2.4m, the Taiwan-based software provider revealed this week.
GigaMedia said last week’s sale of Everest Gaming would lend it additional firepower to expand in Asia, as it revealed a 26% decline in revenues from its European-facing poker and casino arm was largely responsible for dragging it to a third-quarter loss of US$2.4m.
GigaMedia’s third-quarter deficit, compared to a profit of US$12m for the same period last year, was underpinned by a 26% fall in revenues from its gaming software business to US$25.4m, from US$34.5m last year.
The company blamed the revenue fall on lower player activity due to the economic downturn in Europe and competitive pressures, including from US-facing poker sites. Third-quarter revenues from the poker software vertical were US$15.8m, 33% down on the same period of 2008, while casino revenues fell 12% year-on-year to US$9.6m.
The company’s delayed second-quarter results showed net income for the second quarter fell to US$128,000, from US$11.2m for the comparable period in 2008, again affected by economic conditions and strong competitive pressures on Everest, where revenues from the gaming software business tumbled 29% year-on-year to US$26.1m, from US$36.9m last year. Poker revenues were US$17.4m in the second quarter of 2009, 36% down on the same period in 2008, while casino revenues fell 9% year-on-year to US$8.7m.
Looking ahead, GigaMedia said it expected continued challenging operating conditions in its gaming software business in the first quarter of 2010. However, the group said it expected strong potential upside from its new strategic alliance with Mangas Gaming, to which it sold 60% of the Everest Gaming software business last week.
GigaMedia chief executive Arthur Wang said: “We faced tough market conditions and strong operating challenges in the second and third quarters in our gambling software and our Asian online games businesses – and did not respond as well as we should. We were successful, however, in forging a powerful strategic alliance in Europe which we believe will be very value creative – and as a side benefit, free up management time and financial firepower for our planned expansion in Asia.”