Chinese videogaming maven (and regional broadband service provider) GigaMedia (Nasdaq: GIGM ) is set to report fourth-quarter earnings on Tuesday morning. Let's see how the company did in the Year of the Pig, and what's up with the just-started Rat.
What Fools say:
Here's how GigaMedia's CAPS rating stacks up against some of its peers and competitors:
| |
Market Cap (Millions)
|
Trailing P/E Ratio
|
CAPS Rating (out of 5)
|
|
Chunghwa Telecom (NYSE: CHT )
|
$21,220
|
14.5
|
*****
|
|
Shanda Interactive Entertainment (Nasdaq: SNDA )
|
$2,300
|
11.9
|
****
|
|
GigaMedia
|
$992.7
|
31.9
|
*****
|
|
CryptoLogic (Nasdaq: CRYP )
|
$196.8
|
71.4
|
*****
|
Data from Motley Fool CAPS as of March 6.
There's lots of CAPS love for the whole sector, and the reasons are clear. AllTechBaby says it all: "Gaming for money in China, it's gotta make money!" (More on that later.) The few grumpy bears don't believe in that growth thesis, or in the valuation.
What management does:
This company grows in fits and starts, so the top- and bottom-line growth may not look much like a traditional trend. There is no denying that the numbers are impressive, though -- even in the less-stellar periods.
|
Margins
|
12/2006
|
3/2007
|
6/2007
|
9/2007
|
|
Gross
|
75.3%
|
77.3%
|
78.2%
|
78.2%
|
|
Operating
|
23.3%
|
24.5%
|
25%
|
24.6%
|
|
Net
|
32.6%
|
32.3%
|
26.6%
|
25.4%
|
|
Growth (YOY)
|
12/2006
|
3/2007
|
6/2007
|
9/2007
|
|
Revenue
|
113.4%
|
113.4%
|
264.9%
|
204.6%
|
|
Earnings
|
385.9%
|
325.5%
|
88.9%
|
63.7%
|
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
If you've grown tired of gloomy stock charts describing American companies, GigaMedia is a breath of fresh air. Over the past year, the S&P 500 benchmark has slid more than 6% southward, but Giga is up by more than 50%. In the last five years -- make sure you're sitting down -- the share price has increased more than 22-fold. That's an exciting game of mah-jongg!
But the best part is yet to come for GigaMedia and many of its local peers. The Far Eastern economies, like China, Taiwan, and South Korea, are growing like weeds, and there are cultural tendencies toward gaming addiction all around the place. Witness the nearly century-long pachinko craze in Japan, or the flourishing casinos in Macao that are drawing in hopeful dealers like Las Vegas Sands (NYSE: LSV ) all the way from the States.
Put together the pieces of the puzzle: a growing and wealthier middle class, with easier access to the Internet and a predisposition for gambling. All together, that looks like a cash cow. And GigaMedia is still small ...
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