Until last November, online entertainment software developer GigaMedia's
In the fourth quarter, revenues from continuing operations increased 6% to $11.8 million. During this time, net income was up 37% to $2.4 million.
GigaMedia's declining broadband ISP business muted that growth. However, the segment still throws off strong cash flows, which GigaMedia has been redeploying into a higher-growth division: poker software. Interestingly enough, the company is avoiding North America to focus on high-growth foreign markets. Its Everest Poker game has roughly 19,000 real-money customers, up 58% from the third quarter.
Clever marketing has been critical to the company's success. GigaMedia is the exclusive sponsor of the French Poker Tour, the German Poker Tour, and the Japanese Poker Players Association. The company has also invested in building top-quality games and systems that can scale large numbers of players.
Moreover, at the beginning of 2005, GigaMedia purchased FunTown, the largest Mah Jong portal in terms of revenue. The company has indicated that growth has exceeded internal projections and will have a significant impact on GigaMedia's first quarter.
With $62.1 million in the bank, GigaMedia has the resources to continue building new games, buying companies, and enhancing its technology infrastructure. However, the online gaming space is fiercely competitive and can be fickle. Other high-growth gaming companies, such as Jamdat or even big players like Electronic Arts
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Fool contributor Tom Taulli does not own shares mentioned in this article.