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June 13, 2005 Stock Pick: GigaMedia Limited (GIGM)

Stock Price: $2.24

GigaMedia Limited is a holding company which distributes recorded music and provides broadband Internet access services and online entertainment services in Taiwan. The company owns two music store chains in Taiwan through their subsidiary G-Music. GigaMedia also develops online gaming, including gambling, and social networking software through their Grand Virtual subsidiary.

Last Wednesday, GIGM reported their first ever full year profit and reported net income of $1.2 million for Q4, up 76% from Q3. Net income for all of 2004 was $1.7 million with revenues of $99.8 million. We believe earnings were holding GIGM back, but now there is no excuse not to consider GIGM attractive as they continue to turn around operations.

The company has assets of $126 million and liabilities of only $26 million, with cash of $47.5 million. GIGM book value is $1.91. There are 35.35 million shares in the float, virtually none are being shorted right now.

Volume has really picked up since about the end of May. GIGM has sure momentum in the short term.

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