GigaMedia, Taiwan Internet Company, Triples After IPO
Taipei, Feb. 18 (Bloomberg) -- GigaMedia Ltd., Taiwan's most
popular provider of high-speed Internet cable access and the
operator of a Chinese-language Web site, tripled in its first day
of trading as investors bet on booming Asian Internet use.
The Taipei-based company rose 61 to 88, giving it a market
value of $4.3 billion. About 7.8 million shares changed hands. The
company sold 8.8 million shares at $27 each yesterday, raising
$238.4 million for the 18 percent stake. It is the first Taiwanese
Internet company to trade in the U.S.
GigaMedia sells Internet access through high-speed cable
modems and runs a Web site, www.giga.net.tw, that offers Chinese-
language multimedia content and services such as news, stock
quotes and chat rooms. The company has access to 3.4 million
Taiwanese households through its parent's cable interests or
alliances with other cable companies.
``This is a Taiwanese version of Excite At Home,' said
Joseph Ravitch, a managing director with Goldman Sachs (Asia)
L.L.C., which handled the initial sale. ``But it's better because
of the exclusive relationships with the vast majority of cable
operators in the community and a unique broadband content
strategy.'
Excite At Home Corp., based in Redwood City, California,
provides high-speed Internet access via cable-TV lines to more
than one million subscribers. The company, which has a market
value of about $12.95 billion, has risen more than six-fold from
its July, 1997 initial stock sale.
GigaMedia said it has agreements with 23 cable system
operators, 16 of which are members of the Koos Group cable
television network. That network is a member of the Koos Group,
which holds at least 61 percent of GigaMedia's shares following
its initial sale.
The family-run Koos Group is one of the largest Taiwanese
business groups with interests in financial services, cement,
petrochemicals and cable television, GigaMedia said.
GigaMedia's agreements with the cable system operators are
more favorable than the terms of similar agreements between U.S.
cable-based Internet access providers and their cable partners,
the company said.
GigaMedia's surge follows several successful IPOs on the U.S.
markets by Asian Internet companies. China.com Corp., a Hong Kong-
based Web site operator that went public in July, is trading at
almost seven times its initial sale price.
Pacific Internet Ltd., the chief Internet service provider in
Singapore and Asia's first online company to trade in the U.S., is
up four times from its year-ago initial price.
Last year, GigaMedia secured a $35 million investment from
Microsoft Corp. in return for a 10 percent stake, part of
GigaMedia's plan to provide access and other services such as
online content, electronic commerce services and WebTV, which lets
users toggle between television programs and personal computers.
``The Microsoft strategic stake ensures that the Koos group
is on the cutting edge of technology,' Ravitch said.
The number of Internet users in Taiwan will grow to 4.5
million in 2003 from 1 million in 1998 while sales from Internet
commerce will rise to $5.21 billion from $45 million over the same
period, GigaMedia said in its IPO filing with the U.S. Securities
and Exchange Commission.
That growth is reflected in the increase in GigaMedia's `page
views', a measure of a Web site's use; they rose to 11 million in
December for www.giga.net.tw from 800,000 in June.
The demand for high-speed Internet access, whether through
cable modems or over copper telephone lines employing `digital
subscriber line' technology, is growing as the range and
complexity of Internet content increases.
Video and other data-intensive products are best delivered
over high-speed networks, which can be as much as 100 times faster
than conventional personal computer modems and ordinary telephone
lines used by most people to log onto the Web.
GigaMedia faces competition in its Internet access business
from companies that have developed their own cable-based services
such as Eastern Multimedia Group and Leap Technology Corp. The
company's competitors in offering content include China.com and
Yahoo!China, among others.
GigaMedia is well-positioned to expand into China because,
unlike in Hong Kong, the Taiwanese speak Mandarin, which is the
language of most Chinese, Goldman's Ravitch said.
``Taiwanese content is the most popular content in the
mainland. Funky Taiwanese rock and roll singers are among the most
popular singers on the mainland,' he said.
Also, the company's focus on cable is an advantage because
``if you look at Asia and China, people will be receiving the
Internet through their television sets. PC penetration is very low
relative to the U.S.,' Ravitch said.
Kent Yen, 39, and Raymond Chang, 29, are the company's co-
chief executives. Yen, in charge of GigaMedia's access business,
is the former president of Gandu Cable Corp. Chang, who oversees
the company's content media business, previously worked for the
Koos group.
Chester Koo, 46, is GigaMedia's chairman; Angelo Koo, 34, is
vice chairman, and Jeffrey Koo Jr., 35, Leslie Koo, 45, and Andre
Koo, 32, are directors.
GigaMedia trades under the symbol ``GIGM' on the Nasdaq
Stock Market. Deutsche Banc Alex. Brown assisted in the sale. |
