Sigma Designs (SIGM): Losing customers - Baird

From Notable Calls

Baird is out with a negative call on Sigma Designs (NASDAQ: SIGM) saying their checks indicate Broadcom has won Motorola's second-generation high-end IPTV set-topboxes (Microsoft's Mediaroom platform), for launch in 2009. As a result, they expect Sigma Designsto lose IPTV share at large telcos including AT&T, British Telecom, 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. 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

For more calls go to http://notablecalls.blogspot.com/

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