Baird is out with a negative call on Sigma Designs (NASDAQ:SIGM) saying their checks indicate Broadcom (NASDAQ:BRCM) has won Motorola's (MOT) second-generation high-end IPTV set-top boxes (Microsoft's Mediaroom platform), for launch in 2009. As a result, they expect Sigma Designs to lose IPTV share at large telcos including AT&T (NYSE:T), British Telecom (NYSE:BT), and KDDI starting next year. They also believe Sigma will lose market share at Samsung for Blu-ray players this second-half, due to pricing. The Firm believes Broadcom-based Motorola IPTV set-top boxes are already prototyping, and are scheduled for launch in calendar 1H09.
Checks also indicate Sigma Designs could lose significant market share at Samsung Blu-ray players this second-half due to pricing. Baird believes Broadcom has design wins in Blu-ray ramping this year. Both Broadcom and Mediatek plan on launching an integrated back-end/front-end SOC next year. Panasonic is currently selling a 45nm-based Blu-ray back-end SOC.
Reducing estimates, as well as price target to $26 from $30 on SIGM shares. Neutral rating.
Notablecalls: Motorola generated 23% of Sigma Designs' revenues in fiscal 2008, making it their largest customer. SIGM will be a $17-$18 stock soon. Nice call by Baird's Tristan Gerra.