Thursday, November 14, 2013

An IRO's 5-Point Plan for Re-Building Investor Trust

Small-cap online games company GigaMedia (ticker: GIGM) has been struggling for many years. The stock is trading at all-time lows. Management has been repeatedly replaced. And investors long ago headed for the exits.

But new management has arrived. They have a plan for growth. And the company is finally showing some signs of life. 

But will investors return?

On last night's quarterly earnings call I asked management what they intended to do to re-build investor trust and attract new investors.

Here's what they said:
"Over time as we continue to execute our plans we're confident that we will see good growth and increase shareholder value. That will go a long way to building investor trust in GigaMedia.  
In addition to building our games business and our cloud business we are also taking actions to improve shareholder trust.  
First, the management has purchased over 950,000 shares to date.  
Second, to increase investor confidence in our financial reporting we have changed our auditor this year to a big 4 accounting firm KPMG.  
Third, we no longer operate VIEs (questionable Chinese business structure) unlike many of our NASDAQ listed peers. 
Fourth, we have strengthened our board of directors. A majority of them are independent directors and the board has more oversight over strategic matters than in the past. For example, in acquisitions we have stricter policies and procedures including greatly lowered level of investment required for board approval. There are more checks and balances in the system now than in the past.  
Fifth, we'll continue to host investor calls and benchmark our investor relations against best practice. 
Looking ahead into 2014 we will be out on the road again meeting investors face to face.  
In sum, building trust takes time. But we are committed to doing our part to building stronger relationships with investors 
A transcript of Gigamedia's call can be found on their IR site here.

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