GIGM - Sector: Technology---Industry: Multimedia & Graphics Software

[David Randolph]

Hey David,  I saw this posted on the yahoo board by sfhiddendragon.  The poster got the 2 articles from yahoo-chinese and translated them with the following summaries.  I wondered what you might think about it.  Thanks, Ray
#1. http://tw.news.yahoo.com/article/url/d/a...

This article is about why the Xbox360 Mahjong game got delayed. It basically said that a lot of Asian game developers(mostly from TW and SK) are having some problems while transforming from PC/online game developers to XBOX games providers. And MSFT is holding a meeting with these companies in HK now to solve the problems. In term of our funtown, according to the article, since this Mahjong game will target the global market, MSFT said they don't wnat any "gambling feel," so instead of using the virtual money(funtown golden coins), they ask funtown to charge users based on the Time they play. Funtown is adjusting their software, should be ready later this year.

#2. http://tw.news.yahoo.com/article/url/d/a...

This is about funtown has to compensate their members for about 8m NTD(about 240k+ USD) due to an operational mistake at their horse racing game on March 22nd.

The links are in Chinese dmdray69, do you have them in English? Thanks

[David Randolph]

It would be great to have both those articles in English (or Portuguese for that matter) dmray69. Do you have a link to the Yahoo poster that translated the articles?

As for my fundamental estimates, they remain the same (just the EPS multiple estimate rose a bit):



GIGM's share price CAGR is 66.5% and the optimal selling price today is $42.64.

I'll continue holding GIGM.

[dmdray69]

Sorry David,
That was actually the point of posting them.  The guy who posted the summaries said he sometimes finds articles released only in the chinese media and translates them for the yahoo board to help those of us who don't speak or read chinese.  Of course he portrays himself as a long just trying to help.  His disposition doesn't seem malicious since in subsequent postings he felt the info wasn't actually bad, but instead cleared up some things about the impending mahjong release.  The info SEEMED credible but I have been unable to find the articles in english. 
I was posting the info to see if maybe someone else here had run across the same info or if you had, seeing that you often find info that is new to me.  Thanks!!  Ray

[David Randolph]

Sorry David,
That was actually the point of posting them.  The guy who posted the summaries said he sometimes finds articles released only in the chinese media and translates them for the yahoo board to help those of us who don't speak or read chinese.  Of course he portrays himself as a long just trying to help.  His disposition doesn't seem malicious since in subsequent postings he felt the info wasn't actually bad, but instead cleared up some things about the impending mahjong release.  The info SEEMED credible but I have been unable to find the articles in english. 
I was posting the info to see if maybe someone else here had run across the same info or if you had, seeing that you often find info that is new to me.  Thanks!!  Ray

Maybe those articles are moving GIGM down a bit, since the stock opened down 2% or so on no news. Unfortunately I don't know Chinese, perhaps chinaguru or realcoolhead will take a look at those articles and say something about them

Anywa, I don't see how my GIGM estimates can be flawed, they seem so logical and even conservative:



Technically the stock touched the $13.79 support, prior resistance. I don't know if it will test the 50 days simple moving average on this dip or not, but I see the stock at $67.05 three years from now and I'll keep on holding GIGM.

[realcoolhead]

I'd love to. But the links only directed me to the main page of Taiwan Yahoo. 

Maybe those articles are moving GIGM down a bit, since the stock opened down 2% or so on no news. Unfortunately I don't know Chinese, perhaps chinaguru or realcoolhead will take a look at those articles and say something about them

[David Randolph]

I'd love to. But the links only directed me to the main page of Taiwan Yahoo. 

Thanks anyway realcoolhead Listen, there's another way you can help if you have time, I've been wondering about GIGM's FunTown website, because it isn't www.funtown.com, is it fun town in Chinese or something like that?

I would like to know the address of the website and the services it offers. Can you make a search on a Chinese search engine looking for Majhong or Gigamedia's FunTown?

Thanks

The valuation model says GIGM is the third most attractive stock of the Main Portfolio, I'll keep holding it also in the 3 Stocks on Fire Portfolio.

[Se7en]

I found something here http://www.gigamedia.com.tw/news/FunTownCompleted_Press_Release-Final.htm

Founded in 1998 by the Acer computer company, FunTown is based in Greater China, with offices in Shanghai, Hong Kong and Taiwan. Have some fun at FunTown China http://www.funtown.com.cn, FunTown Hong Kong http://www.funtown.com.hk and FunTown Taiwan http://www.funtown.com.tw.

About FunTown

FunTown is one of the leading casual game platforms in Asia, with over four million registered users and a wide variety of fun and exciting games, including the world's largest Mahjong platform in terms of revenue. FunTown generates revenues through access fees and also through the sales of various in-game items.

FunTown's games are designed to be fun for players of all levels of skill and experience, from the complete beginner to the "Game Master." In addition, FunTown offers a strong online gaming community, with many opportunities for players to make friends and play together on teams competing against other groups in tournaments for fun and prizes. The company's software allows users to create their own fun and humorous online persona – offering players a wide selection of clothing, styles, icons and other elements to individualize a player's online look and keep their entertainment fresh and exciting.

FunTown's games can be played on personal computers, mobile phones, airplane entertainment consoles and, soon, on the Xbox 360 when launched in Taiwan and Hong Kong in March 2006. FunTown also has strong research and development capabilities and has developed nearly all games in-house.



Some more info: http://www.lexdon.com/article/GigaMedia_Buys_World_No._1/25134.html

[realcoolhead]

Well, Se7en found them already 

They offer people to play all kinds of games, not only MaJiang, actually most of them are card games. Of which, the Taiwan one seems most extensive in terms of different kind of games offered. One nice thing about these sites is that they are "localized". For example, people from Mainland China, Taiwan and HongKing all play Majiang, but they use different rules. Not only that, people from Mainland China prefer simplified Chinese yet those from Taiwan use traditional Chinese. The websites took that into consideration --- or because they were locally acquired anyway?

Of course as investors we care most about how they make money. I don't think they rely on advertisement much. Instead, people pay to play after initial try. They can pay real money, or they can buy game related stuffs and gain points which can be used to play games. If they are good at some games, they can get bonus points. For some really good players they can essentially play for free. The last part really get young kids hooked as they compete with each other fiercely for both points and for pride ...

Hope that helps. 

[David Randolph]

Thanks a lot for the information Se7en and realcoolhead

Asian people really have different design tastes than western people, don't you think? The FunTown website I enjoyed more was indeed the Taiwanese. Since Acer (the founder of FunTown) and Gigamedia are both Taiwanese companies, they probably put more effort on that website: http://www.funtown.com.tw

Today I studied one of GIGM's competitors, NTES, and that has lead me to raise my net profit margin estimate for GIGM, from 30% to 40%. Here's why:

1) NTES's revenue growth is expected to slow down a lot, maybe that's because GIGM is taking market share from it, since GIGM is growing very fast. NTES is a $2.36 B market cap company, so it's possible for GIGM to have that market value too (GIGM is currently worth $716 M)

2) NTES has the highest net profit margin I've ever seen, 57.4% Given this I shouldn't expect GIGM's net profit margin of 32.2% to go down to 30% over the next 3 years as revenue grows, net profit margin will probably go up to the 50% area, like it happened to NTES. For now I'll leave it at 40%.

This has raised the expected share price CAGR to 86.3% and the optimal selling price to $57.68:



I'll keep holding GIGM with strong hands.

[Se7en]

Prominent Entertainment Industry Executive Joins GigaMedia
Friday April 20, 5:26 am ET


TAIPEI, Taiwan, April 20 /Xinhua-PRNewswire-FirstCall/ -- GigaMedia Limited ("GigaMedia" or the "Company") (Nasdaq: GIGM - News) announced today the appointment of Samuel Chou, a renowned entertainment industry executive, as head of online games and entertainment for GigaMedia.




Mr. Chou joins GigaMedia with more than 20 years experience in the entertainment and advertising industries and a distinguished record of developing strong brands and driving strong growth.

Mr. Chou was chairman and chief executive officer of Warner Music for the Greater China Region from 2004 to 2006. Prior to that, Mr. Chou was managing director of Warner Music in Taiwan, where he built Warner Music into the number one record label, quadrupling their market share and tripling their profitability. While at Warner Music, Mr. Chou was selected by Time Magazine as one of five "People to Watch in International Business." Mr. Chou was also previously the chairman of the International Federation of the Phonographic Industry in Taiwan.

"We are tremendously excited to welcome such an accomplished industry leader to our team," stated GigaMedia Chief Executive Officer Arthur Wang. "Samuel has been a major force in defining the entertainment experience in Asia for over a decade and we look to his leadership as we grow our online entertainment platform across the region."

"Samuel has repeatedly proven his understanding of what is relevant to our target audience," explained Giga CEO Arthur Wang. "And he will be key in helping us shape the most meaningful online offering -- games and other forms of online community, expression and entertainment -- which have now claimed primacy over traditional media."

As chief executive officer and president of online games and entertainment at GigaMedia, Mr. Chou will have overall responsibility for the Company's rapidly expanding online games and other online entertainment operations throughout Asia.

"I am thrilled to join such a strong company with such exciting growth potential," stated Samuel Chou. "I look forward to working with the team and leading GigaMedia through a period of significant and sustained growth and product success."

Mr. Chou joins GigaMedia from AsiaMuse Entertainment Group, a leading independent content and media group with services in key markets including recorded music, artist management, music portals, corporate communications, and television and media buying.

Samuel Chou earned his Master of Business Administration degree from the prestigious National Jiao Tung University in Taiwan and his Bachelor of Arts degree from National Taiwan University.


http://biz.yahoo.com/prnews/070420/hkf002.html?.v=54

[David Randolph]

It looks like GIGM responded well to my Friday's upgrade

After studying NTES I opened my mind to the very real possibility of GIGM having a net profit margin of 50% or more in the future, given the nature of its business. But I put "just" 40% net profit margin in my valuation model and results look like this:



Given a 3% dilution rate, 50% revenue growth, 40% net profit margin and an industry average earnings multiple of 39.76, GIGM will be a $90 in 2009 and it should only be sold today at $57.68.

I'll keep holding GIGM.

[Ares]

I have 2 charts for GIGM.
I'm looking forward to opinions in which one makes more sense.

[David Randolph]

Hi Ares, thanks for both charts. I've long given up on trying to predict short term movements and your technical analysis is short term oriented, so I don't know how to pick one of your two technical views.

I can't and I don't want to buy to sell in a few days, to buy again a bit lower, to sell a bit higher. When I look at charts my main interest is the long term trend. Is it positive or negative? Is the stock above the 200 days simple moving average? Is the right side of the chart higher than the left side of the chart? The answers to these questions is what I look for in the charts.

But I respect and understand more short term oriented strategies.

As for GIGM, the main trend is bullish and fundamentals look very attractive:



Unless Europe bans online gambling or China forbids internet gaming, I don't see any downside to my estimates for GIGM. Of course, there's always risk, but current fundamental trends point to outstanding wealth creation for GIGM shareholders.

I'll keep holding GIGM.

[la-onda]

GIGM: Short Interest UP 11.6% to 3.8M in Apr 2007
Tuesday , April 24, 2007 16:17ET

According to new short interest data from NASDAQ, short interest for GigaMedia Limited (NasdaqNM: GIGM) INCREASED 11.6% to 3,784,099 shares for the month ended mid-April, 2007.

SYMBOL          MARCH           APRIL          CHANGE       %CHANGE  DAYS/COVER
--------   -------------   -------------   -------------  ------------  ----------
GIGM           3,392,170       3,784,099        +391,929       +11.55%           4

Based on GIGM's 20-day average daily share volume of 1,176,350, it would require approximately 4 day(s) of buying to cover this short interest.

[pinoleropuro]

how do you get such informative charts? my broker has pretty good charts but never as informative as the ones you guys usually put up.