GigaMedia Ltd (和信超媒體), one of Taiwan's largest Internet access providers, will lose money for longer than forecast after agreeing last week to return more than half of its cash to shareholders because it was unneeded.
Taiwan's only Nasdaq-listed Web company had expected all cash coming in to equal all cash going out in the second quarter.
After distributing NT$3.7 billion (US$105 million), the company will have less income from cash investments and must therefore estimate a new cash-flow break-even date, said company spokesman Brad Miller.
The company used income from outside investments to subsidize operating costs, which have been higher than sales of Internet access services. The company spent NT$74 million more than it generated each month in the third quarter of 2001.
"We're fairly comfortable with our cash position after the return of capital," Miller said. "We haven't made any significant investments over the past 16 months and don't anticipate needing the returned cash for future investment."
GigaMedia, which had NT$6.5 billion of cash at the end of the third quarter, posted a loss every quarter since its February 2000 debut on the Nasdaq stock market. Its shares have tumbled more than 90 percent since they started trading. The company expects to turn to an operating profit in the first quarter of 2003, Miller said. Operating profit, sales less the cost of goods sold, wages and other expenses, isn't the samething as cash-flow break-even.
The company plans to cut costs further by passing marketing expenses to partners such as Gamania Digital Entertainment Co (遊戲橘子) and negotiating lower transmission costs, Miller said. He wouldn't comment on a Chinese language Commercial Times report that GigaMedia plans to cut more jobs after firing almost a quarter of staff last year.
Major shareholders in Giga-Media include Taiwan's Koo (辜) family, which owns about 60 percent and Microsoft Corp, which owns 8 percent.
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