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Sigma Designs (NASDAQ:SIGM) shares are down sharply this morning after the company late yesterday disclosed disappointing results for its fiscal first quarter ended May 3. As Tiernan Ray noted in a post yesterday, the company missed the Street consensus at both the top line and the bottom line.

The company’s post-earnings conference call (see transcript) was less than encouraging. Sigma said it expects FY Q2 revenue to be up slightly on a sequential basis; given the $56.9 million reported in Q1, the old Street consensus estimate of $69.2 million clearly looks way too high. In response to a question on the call, the company indicated that its old guidance of revenue for the full year of $300 million to $350 million was no longer valid, although it did not actually provide new guidance.

“I think as a result of this call and what we indicated we’re pulling away from that range,” VP of strategic marketing Kenneth Lowe said on the call. “I think at this point in time we’re going to pull that guidance.”

The company seems to be facing significant issues in both of its two primary businesses: providing chips for IPTV set-top boxes and for Blu-Ray disk players.

On the IPTV business, the company indicated that there was an inventory issue in the quarter. But Lowe indicated on the call that as the market grows, “the largest suppliers of set top boxes will need to take advantage of multiple sources of media processor chips to achieve maximum supply assurance, price negotiation and other advantages.” Given that this is a business where Sigma is the leader, it would seem to suggest intensifying competition.

Meanwhile, the company also said that the growth of the Blu-Ray market will be “both smaller in magnitude and later than initially expected.”

“Since the format war came to a conclusion far sooner than the industry had anticipated, the Blu-Ray camp has been somewhat caught off guard which has created issues with the level of component supply, the continued transition to the format and the state of promotional campaigns,” he said. Lowe said there seems to a shortage of Blu-Ray drives “as manufacturing plants gear up for a shift in magnitude.” He also said that in the second half, there will be an increase in competition in the Blu-Ray chip segment. He notes that Panasonic offers “a range of Blu-Ray chips,” and that “NEC has been aggressively courting other Japanese Blu-Ray accounts.”

Lowe said he expects many of the company’s Blu-Ray customers to add a second source of chip supply.

Analysts at RBC Capital, Roth Capital and Lazard all cut ratings on the stock today.

Source: Sigma Designs Misses; in Freefall