Brad Miller – Director, IR Collin Hwang – CEO Dirk Chen – CFO

Ladies and gentlemen, thank you for standing by and welcome to the First Quarter 2013 GigaMedia Limited Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. (Operator Instructions). I must advice you that this conference is being recorded today, Wednesday the 22nd May 2013. I would now like to hand the conference over to your speaker today, IR Director, Mr. Brad Miller. Thank you, sir. Please go ahead.

Thank you. This is Brad Miller, Investor Relations Director of GigaMedia. Welcome to our conference call to discuss GigaMedia’s first quarter 2013 financial results. Joining me today are, Dirk Chen, our CFO, and on a separate line Collin Hwang, our CEO Before we begin, I would like to remind you that a number of forward-looking statements will be made during this conference call. Forward-looking statements are any statements that are not historical facts. These forward-looking statements are based on the current expectations of GigaMedia and there can be no assurance that such expectations will prove to be correct. Because forward-looking statements involve risks and uncertainties, GigaMedia’s actual results could differ materially from these statements. Information about factors that could cause, and in some cases have caused, such differences can be found in GigaMedia’s Annual Report on Form 20-F filed with the US Securities and Exchange Commission in April, 2013. This presentation is being made on May 21, 2013 in Taiwan. The content of this presentation contains time-sensitive information that is accurate only as of the time hereof. If any portion of this presentation is rebroadcast, retransmitted, or redistributed at a later date, GigaMedia will not be revealing, or updating the material that is contained therein. After today’s prepared remarks, we will respond to questions we’ve received by e-mail and we’ll also take live questions. With that, I’d like to turn the call over to our CEO, Collin Hwang.

Hello everyone. Thank you all for joining us. Today, I will review what we have been doing in the first part of 2013, to grow GigaMedia and why we are confident in building shareholder value. I will then turn the call over to Brad for look at financial and operational details. I joined GigaMedia as the CEO in late November 2012. Since then, we have been focused on an internal restructuring, raising the bar on operational excellence and driving our costs. At the same time we have been building out our product offerings and improving our platforms. We are laying the foundation for growth in our online games and cloud service businesses. The web and mobile games and cloud computing set are both full of opportunity in Greater China. Following a lot of hard work in the first half of this year, we plan to begin scaling up our operations in these markets in the second half of this year. We are off to a good start, cutting cost and building stronger operations. G&A was down sharply year-to-year. Headquarters expenses in the first quarter were the lowest in more than 15 quarters. Development of new web and mobile games is on track. And our new cloud business has launched operations and recently expanded into the government sector. I want to highlight at our lower expense structure, it’s a big advantage as we grow revenues. As we scale up, we expect to be able to capitalize on the bottom line leverage, we would get out of that. Looking ahead, we are confident about our prospect in 2013 and beyond. And we discussed our primary growth drivers. Our first major driver is FunTown, our online game business. With FunTown, we plan to enter the high growth web mobile game market in Greater…

Thanks Collin. As Collin mentioned, in the first quarter we continued to restructure, invest in and grow our businesses. We are making major transitions. In our games business, we continue taking important steps to reposition and strengthen our operations to enter the high-growth web-mobile games market where players are continuing to migrate and where market growth is strongest. We are moving away from PC based games as that market is in decline. In our cloud services business, we expanded into the government sector. Overall then, there are a number of growth initiatives underway. Let me now highlight some of these in a review of our businesses. In FunTown, our online games business, we took strong steps to build a better business that will enjoy better margins and that will enable us to more quickly develop and modify products for targeted markets. Significant changes are underway in one, our focus and two, the way that we operate our online games business. In line with our new focus on self developing games versus licensing them. In the first quarter, we terminated several underperforming license games to support the launch of new self-developed web and mobile games starting in the second half of this year, FunTown continued developing a new game platform. FunTown continued developing a new integrated internal game developed in this testing environment which will enable FunTown to better identify and resolve game issues and drive efficiencies. In addition, FunTown began transitioning from an on-premises server system to a virtual cloud based system which is expected to lower future operating cost and increase the stability of game operations. We are making investments of approximately $130,000 to upgrade these systems and expect these investments to pay off in about 24 months. In GigaCloud, our cloud services business, we began providing services to…

Thank you. (Operator Instructions).

Operator, as we’re waiting for any possible questions, we have some questions that people have e-mailed in. So, I’ll start with a question regarding the Taipei, new Taipei City Announcement that we just made. Could you tell us a little bit more about the new Taipei City endorsement of GigaCloud? And I think Collin has a few comments to share on this.

Yeah. It was a honor to be selected by the New Taipei City government. We were selected after a very competitive screening process, as our product matches well with the least of SMEs. This endorsement of our product will help us build the trust of SMEs and build our subscriber base. Corporation with new Taipei City will also help educate the market about cloud services. We plan to continue to look for opportunities with government in Taiwan and Mainland China. And please note that this corporation is a five-year program. So it’s a long-term commitment between the government and GigaMedia. And government is acting profitable between us and SMEs. And platforms and the government does a really good job promoting and educating the market as well. Thank you.

Thanks Collin. Another question that’s come in is, could you estimate your cash and your debt in 2Q, Dirk?

Okay, thanks Brad. Hi, good evening, this is Dirk Chen, CFO of GigaMedia. In Q1, our company cash and the much of the activities is about $78 million and we also have one short-term debt, it’s about $7.8 million. This is equal to only one often best we had. To strengthen cash SME, we have our limited, this only one short-term in Q2. And we see stronger disposal of SE in Q2 in the prior, somehow cash in our (inaudible) to payout this debt in Q2. And focusing Q2 end, our total cash and cash marketable securities are now should be within the range of $78 million to $79 million. That’s our cash position right now. Thank you.

Thanks Dirk. Operator, any questions on the line?

At this stage, no questions from the phone lines. (Operator Instructions). It appears there are no questions from the phone line. I’d like to hand the conference back to the presenters. Please continue.

Okay, thank you. Another question has come in, it’s – we get a number of questions from investors on potential for share buybacks. And what are some of the steps that you’re considering to do to grow shareholder value? I think I would say, first of all, we’re very focused on building a new business, a stronger company and driving shareholder value that way. We’re not making incremental changes this year to GigaMedia, we’re making major changes. We’re improving our games business as we’ve said in a number of ways to build better revenues, better margins, better product controls to adapt to market trends. We launched the new cloud business which we think has a great opportunity and we’re continuing to build that business out. In addition to focusing on our business, we’re confident that these changes will increase shareholder value. But in addition to that, there are some other steps that we’re continuing to take a look at in terms of shareholder buybacks. There are some options that we have but there are also some restrictions that we have. On share buybacks and dividends and another option, we have to keep in mind that we’re a Singapore company and we face restrictions because of that. Share buybacks are limited to 10% of all outstanding shares and price and volume are limited to 105% and 25% respective averages for previous 5 days. For us, basically that means the limit of about 10,000 shares a day and a buyback program. Now under the rules, our buyback would need to be during an open window period which for us means from basically about now until June 21, meaning the buyback would be limited to a total of about 22 days or 200,000 to 250,000 shares. Bottom line is, we wish we could buy more shares but we cannot. So we’ll continue to look at that option, another option of course is dividends. But again, as a Singapore company we face restrictions, dividends in Singapore are only allowed when a company has posted an annual profit. So, we’ll revisit that option when it’s open. Other options include, insider buying some IR programs. To address undervaluation, management has already purchased over 950,000 shares to date, to increase investor confidence and our financial reporting. We plan to change auditors this year to a big four accounting firm. You may have noticed that in our proxy materials. This change of course is subject to shareholder approval at our AGM next month. We also recently launched a new corporate website, and we plan to do road shows as our story unfolds, to market our story in the US and participate in investor conferences as well. In sum, we’re just committed to addressing undervaluation and enhancing shareholder value going forward. And we’ll continue to take actions available to us to do so. Operator, any further questions?

At this stage, no questions from the phone lines. (Operator Instructions).

Okay. Thanks very much operator. That’s all we have for today. For further information about GigaMedia or if you have questions and would like to contact to company, please visit our website at www.gigamedia.com. That concludes today’s call. And thank you again for joining us.

Thank you ladies and gentlemen. That does conclude the conference for today. Thank you for participating. You may all disconnect.

Thank you.