GigaMedia Offloads Legacy Biz for $20 Million

28 August 2008

GigaMedia Ltd., the Taiwan software developer, has today unloaded its legacy cable and Internet service provider business -- a long-in-coming move analysts think will have little near-term impact on the company's shares.

The deal, done with China Network Systems Company, a cable television service provider in Taiwan, sees GigaMedia take $20 million in cash plus up to $5 million over the next two years.

The company said it is set receive a one-time gain of $8 million on the sale, which it expects to close shortly.

"GigaMedia has been looking to sell this legacy business for a while, so it's nice to see," one analyst told IGamingNews in an e-mail this morning.

"The sale improves the balance sheet and allows mgt. to focus on the core online business," the analyst added. "However, I don't think it will have too much impact on the stock in the near-term."

This cable and I.S.P. business was the last of GigaMedia's noncore assets that it wanted to sell following a strategic restructuring initiative that began in 2004.

"They (GigaMedia) have a big bet on these online games in China," another analyst told IGN via e-mail today. "The market doesn't seem to have backed it yet, but they have some big titles.

"There could be some synergy with the with the European gambling businesses given the deals that others have done in Asia, etc., and the non-betting revenues -- once you have customers, there is the cross-sell opportunity," the analyst suggested.

In other GigaMedia news, management has made public a desire to enter the sports betting market, and financial sources have indicated to IGN that the company's partner may be Centrebet International Ltd. of Australia.

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.