GigaMedia Turnaround Continues: Positive Operating Income in Online Games Business and Stronger Cash Position in 3Q12

GigaMedia Limited

announced today that as a result of continued strong execution of the company's turnaround plans by new management, the company expects positive operating income in its online games business and a stronger cash position in the third quarter of 2012. The company's turnaround plans, driven by Chief Executive Officer John Stringer, are based on effectively managing cash, driving productivity, and executing new growth plans in online games and cloud computing. In the first quarter of 2012, to better manage cash and improve productivity, the company merged its offices in Hong Kong and began implementation of a disposal and asset optimization program targeting non-core investments and underperforming assets. GigaMedia has continued to make progress in these efforts. In the second quarter of 2012, to further simplify its operations and reduce its cost structure, GigaMedia reduced personnel, closed its loss-making online game operations Jidi Joy in Shanghai, and initiated the disposal of its underperforming online game operations IAHGames in Singapore. GigaMedia also continued to sell part of its non-core game studio holdings. In the third quarter of 2012, the company has completed the disposal of its IAHGames business unit and continues to dispose of non-core game studio holdings. Productivity and cost savings from turnaround initiatives executed in the first half of 2012 are benefiting GigaMedia's financial performance. As a result of these actions and the timing of new game licensing revenues, management expects a quarterly sequential decrease in consolidated operating loss with positive operating income in GigaMedia's online games business in the third quarter of 2012 and an operating margin in online games of approximately 15 percent. GigaMedia's balance sheet remains healthy. The company's current cash, cash equivalents, restricted cash, and marketable securities-current were approximately $96 million as of July 31, 2012; management expects to add to this net cash proceeds of approximately $5 million in the third quarter of 2012, primarily from sales of game studio holdings.