03/24/2012 : GIGAMEDIA LIMPS ON (Update)
Dysfunctional business model
Seems all hopes are pinned on a new chief executive officer and chief financial officer to lead a turnaround as online software and services provider GigaMedia Limited turned in dismal full year 2011 results this week.
Key performance indicators for the company's 2011 Full Year period include:
– Consolidated revenues decreased to $34.4 million (FY2010: $64.7 million) due primarily to the deconsolidation of Everest Gaming and T2CN.
– Revenues in the Asian online games business decreased to $34.4 million (FY2010: $38.9 million), although 12 percent growth in FunTown revenues more than offset by the loss of revenues due to the deconsolidation of T2CN.
– Consolidated gross profit decreased to $19.1 million (FY2010: $43.6 million)
– Consolidated gross profit margin declined to 55.5 percent (FY2010: 67.4 percent), reflecting the deconsolidation of Everest Gaming and a lower gross margin in the Asian online games business during the period.
– Consolidated loss from operations was $24.1 million (FY2010: $47.7 million)
– Consolidated EBITDA was a loss of $67.9 million (FY2010: income of $13.6 million)
And the companies 40 percent equity interest in Everest Gaming (now part of BetClic Everest) hasn't helped. Everest Gaming reported total revenues of $10.9 million, including poker revenues of $7.4 million, with approximately 82,000 unique active players and 24,000 new depositing players… and a total net loss of $86.7 million for the period.
John Stringer, the newly appointed chief executive officer at Gigamedia commented: "Business unit deconsolidation’s resulted in sharp revenue declines in 2011. Unfortunately, costs and expenses were not adjusted quickly enough in response, leaving a dysfunctional business model.
"In 2012, new Giga began to take shape: Dirk Chen, our new CFO, and I joined the board at the start of the year, right after the addition of two new board members, together we are making good progress implementing a turnaround plan based on an explicit decision-making framework with clear objectives: 1) effectively managing cash; 2) maintaining the company's listing on NASDAQ, and 3) executing a new vision for growth.
"We are now increasing focus on key business sectors and beginning to adjust our business model to improve our expense to revenue ratio. We look forward to updating our progress in 2012, confident in our ability to deliver improved performance by year-end."