Sigma Designs Should Fall on Lost Blu-ray Customer

Jun. 9.08 | About: Sigma Designs, (SIGM)

Baird is out with a very negative call on Sigma Designs (NASDAQ:SIGM) saying their recent checks indicate Sigma Designs has lost one more tier-one Blu-ray customer recently and has likely lost its top two customers in this segment, leading them to believe the company's market share of the Blu-ray DVD player market could be well below 50% by year-end.

Additionally, checks indicate continued weakness in digital TVs for Sigma, a segment which had previously looked promising for this year. Baird does not expect year-over-year growth for Sigma's digital TV revenues in the July quarter as a result. They believe weakness is predicated
on lack of a strong integrated de-interlacing solution.

Despite their expectation for Sigma Designs to ramp at France Telecom in the second half of this year (which they estimate is a $20 million revenue opportunity), the firm would remain cautious on Sigma's near-term prospects.

Cutting estimates and reducing price target to $20 from $22. Reiterating Neutral rating on SIGM shares.

Notablecalls: I suspect SIGM is going to get whacked today. We may be near capitulation but I just don't see SIGM hitting consensus estimates. Consensus needs to come down big time (so will the stock).