GigaMedia Stock Takes a Beating

Taipei, Taiwan (TheStreet) -- Taiwan-based gaming software provider GigaMedia(GIGM) is taking a beating, after both its second, and third,quarter results fell below Wall Street estimates.

GigaMedia stock has dropped 11.3% to $3.70 in the morning trading session.

GigaMedia reported that its results were weighed down by the economic downturn in Europe, which resulted in a marked decrease in playing activities. During both quarters, revenue was also hurt by the traditional slowdown in the European gaming software industry during the summer holiday season. GigaMedia said illegal gaming sites operating in the U.S. had also upset the company's revenue.

For the third quarter, GigaMedia posted a net loss of $2.4 million, or 4 cents per share, compared with a profit of $12 million, or 20 cents per share in the same quarter last year. The figure fell far short of the Wall Street consensus estimate of 12 cents per share. The company's third-quarter revenue declined by 19% to $37.2 million.

Meanwhile, GigaMedia's second-quarter net income fell to $128,000, compared with a net income of $11.2 million in the second quarter of 2008. It also reported diluted earnings of a penny per share, which fell far below the analyst consensus estimate of 9 cents per share.

Its second quarter revenue fell 22.9% year-on-year to $37.7 million.

Last Wednesday, GigaMedia announced that it would drive future growth through the "strategic alliance" that is has entered into with European gaming leader Mangas Gaming.