SIGM

[David Randolph]

Cramer just gave this one a $100/share target price!

Thanks for the information pinoleropuro. I'm interested in his reasons, here they are:

«Cramer singled out one tech stock for investors to consider: Sigma Designs (SIGM), which he described as a play on the slow demise of cable companies and the rise of telephone companies competing for those services.

Cable companies are losing tons of subscribers, he said. Meanwhile, AT&T, in addition to a big buyback, has announced plans to spend $5 billion on its U-verse TV service in the next few years.

Sigma, Cramer said, should get a big cut of that money as it designs and makes the chips for the set-top boxes. The company, he said, blew its earnings out of the water last time it reported, which caused analysts to aggressively raise their price targets.

Cramer said he's been waiting for a pullback to recommend the stock. It's come down, he said, because they can't make enough product to meet demand. That's a high quality problem to have and leaves SIGM with pricing power.»

There's also a good thread on SIGM's Yahoo Finance message board:

Did anyone see ATT (T) estimate 500-600% growth for U-verse

All this looks very promising for SIMG.

I'm not feeling well today , I'll just send the newsletter and go to the doctor, see you.

[terainvestment]

Ouch...when Cramer says to buy it's time to sell :-)

David, take care of your health...I have heard you many times saying you do not feel well, and health is the first thing to consider!

But please never give up to your great job you are doing with 3SOF! ;-)

[Rmagos]

Samsung's New Home Theater-in-a-Box (HTiB) Powered by Sigma Designs
Business Editors/Technology Writers

MILPITAS, Calif.--(BUSINESS WIRE)--December 14, 2007--Sigma Designs
(Nasdaq:SIGM), a leading provider of highly integrated system-on-a-chip (SoC)
solutions, today announced that its highly integrated SMP8634 media processor
was selected by Samsung Electronics Co., Ltd. to power its new HT-BD2 home
theater-in-a-box (HTiB), the first home theater product to combine a Blu-ray
player and sound system into one product offering.

Our innovative home theater-in-a-box is the first to combine a Blu-ray player
and sound system in one and consumers can now enjoy the full HD 1080p cinematic
video quality of a Samsung Blu-ray disc player with an immersive audio
experience that takes watching movies to a whole new level, said Mr. M. S.
Bang, Vice President, Digital AV Division, Samsung Electronics. We selected to
use Sigma`s SMP8634 chip as it enables everything our home theater enthusiast
customers demand, specifically the highest quality in picture and sound.

Samsung`s HT-BD2 HTiB delivers full HD 1080p cinematic video quality with an
immersive audio experience. It includes a HT-BD2 7.1 channel HD receiver
speaker system that supports Dolby TrueHD and DTS-HD Master bitstream audio
format for richer, deep and powerful sound. Its Blu-ray player, powered by a
Sigma SoC, offers full compatibility with 24 movie frames per second playback
reproducing movies in their native format. As a majority of movies are filmed
at 24 frames per second, the HT-BD2 is able to playback movies in their native
format, reducing unwanted artifacts. The HT-BD2 is also compatible with many of
today`s HDTVs.

Sigma is excited to participate in this innovative HTiB product category with
Samsung, said Ken Lowe, vice president of strategic marketing at Sigma
Designs. The SMP8634 is the basis for a large number of leading edge consumer
products and its features and performance were a natural fit for the HTiB.

About Blu-ray

Blu-ray (Blu-ray Disc or BD) is a leading standard in the market for
next-generation, high-definition optical players, which is based on blue laser
disc technology. Blu-ray offers consumers the highest quality viewing
experience which includes high definition video at 1080p resolution,
picture-in-picture video, high definition multi-channel audio, 3D style
graphics and enhanced interactive features such as real time director's
comments, pop-up menus, and more.

About Sigma SoCs

Sigma provides advanced media processor silicon and software that constitute a
system-on-a-chip (SoC) solution for designing Blu-ray or HD-DVD players,
enabling customers to focus on software development and value-added features
that extend beyond basic operation. The next-generation technology contained in
Sigma`s SMP8634 media processor enables players to offer stunning, precise
pictures and remarkably beautiful sound as well as intelligent interactive
features.

About Sigma Designs, Inc.

Sigma Designs is a leading fabless provider of highly integrated
system-on-chip, or SoC, solutions that are used to deliver multimedia
entertainment throughout the home. Sigma`s SoC solutions combine its
semiconductors and software and are a critical component of multiple
high-growth, consumer applications that process digital video and audio
content, including internet protocol TV, or IPTV, high definition DVD players,
high definition TVs, or HDTVs, and portable media players. Headquartered in
Milpitas, Calif., Sigma Designs also has sales representatives in the United
States, Belgium, China, Japan and Taiwan and sells its products through a
third-party distributor in Korea. For more information, please visit Sigma
Designs web site at www.sigmadesigns.com.

Safe Harbor Statement

This press release may contain forward-looking statements, including statements
about the projected timing and extent of customer shipments as well as the
expected use of Sigma`s media processor and wireless chipset products. Actual
results could vary from those projected in the forward looking statements as a
result of various factors, including worldwide economic conditions, changes in
the customer`s ability or desire to complete the rollout, consumer reaction to
the new products and services being offered, the ability of Sigma to deliver
sufficient quantity and quality of MPEG decoder chips, prices for the Sigma
chips, alternative offerings by competitors, and the ability of the parties to
work together successfully to achieve the rollout.

Sigma Designs, Inc.
Ken Lowe, 408-957-9850
[email protected]

[David Randolph]

SIGM filed an SEC form requesting shareholder's approval to increase the number of authorized shares from the current 37 million to 102 million:

Form DEF 14A -- Other definitive proxy statements

Probably management is planning to do a stock split. I'm not worried about this because SIGM's balance sheet shows $249 M in cash and marketable securities and total debt is just $27 M.

I guess the stock just had to come down to close the gap at $59.7, just like in happened in point "2" on the chart below. Pinoleropuro did well in waiting for this entry point. I hope he indeed buy the shares on the closing of the gap and I admire his patience before buying.

I'll keep holding SIGM for the long term.

[terainvestment]

WATCH LIST MISSING YOU!

Hi David,

what about to propose every week a good stock, small or medium, and post it on the watch list as a strong buy?

I think this could benefit all the community who can invest money also in other stocks that are not comprised in the main portfolio.

Now the watch list is sometimes updated and sometimes not, while I think is a very powerful tool we could together use.

Ciao from Italy,

A.

[Garoh]

Hi

It's another chance to get in this stock for those that haven't bought it yet ..
$57-$57.5  will be a one time offer 

I'm waiting for it . It should perform very well soon .

[pinoleropuro]

I agree except I think it might bounce off the 50sma at 58.53
http://www.stockta.com/cgi-bin/analysis.pl?symb=SIGM&num1=1&cobrand=&mode=stock

[David Randolph]

Hi

It's another chance to get in this stock for those that haven't bought it yet ..
$57-$57.5  will be a one time offer 

I'm waiting for it . It should perform very well soon .

I hope you're right (again) Garoh, SIGM has been the ugly duck of the Main Portfolio over the last few days.

I went for a higher degree of safety here, buying a $1.5 B plus market cap company, and so far what I have is a 16.9% loss on the head Technically nothing unusual or trend changing has happened, just a normal correction.

Fundamentally there's a lot of controversy, not with the company itself, but with shares. People are scared by the proposed increase in the # of authorized shares from the current 37 million to 102 million (I personally believe the company will announce a stock split, but I'm not sure) and also because insiders have been selling shares ... there's a good post on Yahoo Finance about insiders selling SIGM:

Insiders are NOT "dumping"

The company reported $0.72 EPS in Q3 2007 and it gave guidance saying Q4 will be even better:

«The Company expects a continued increase in demand for its products with 10% to 15% growth in net revenues for the fourth quarter compared to the previous quarter.»

I'd say EPS in Q4 2007 will be about $0.80 ... analysts expect $0.82.

Anyway, the real issue around SIGM are profit margins:



You see, analysts expect 56.5% revenue growth in fiscal 2008, but just 5.3% growth in EPS. This would mean a sharp reduction in gross and net profit margins, which were 53.2% and 31.2%, respectively, in Q3 2007.

Historically SIGM's gross margin has been between 48% and 52%, and management expects that to continue:

«While the Company's gross margin has been stronger than expected in recent quarters, the target remains 50% within a range of 48% to 52%.»

And what about net profit margin? Well, the tax rate was just 12.2% in Q3 2007. This is much lower than average and probably it has to do with tax loss carry forwards. If the tax rate were a more "normal" 40%, then net profit margin would be reduced by about 10 percentage points to 21.6%. With a 21.6% net profit margin and $344 M in revenue, fiscal 2008 net income would then be $74 M. If we consider the share count will rise 10% this would mean EPS of $2.32, below the $2.60 expected by analysts for fiscal 2008.

With $2.32 EPS the forward p/e would be 24.5, which seems expensive, given that EPS would be lower in 2008 than in 2007.

SIGM reminds me a lot of NVTL and SWIR, stocks in a hot industry within the technology space. Suddenly competition kicks in, margins are compressed and the earnings multiple is reduced. NVTL and SWIR were cut in half recently ... if the same thing were to happen with SIGM we would then see $36.5 a share in the near future.

I guess my first impression of SIGM was the right one and then I got overly enthusiastic about the outstanding 3rd quarter results, not looking into the future or the tax rate issue.

If I wanted to get advantage of  the IPTV trend I should have bought SIGM in the $10 - $30 range. At $68 I was paying too much, getting in late on the technological cycle.

Trading Plan:

I opt to take a loss on SIGM while it's small. The trading plan for SIGM is SELL.

[la-onda]

just fyi:
Report Summary
• The value of Sigma Designs (SIGM) stock has
declined in recent weeks in some part due to the
competition concerns and blu-ray dominance.
Unfortunately for bears both concerns have been
magnified as if SIGM is facing Goliath.
• SIGM has processors being deployed by 20 of the
largest carriers. We have found that the superiority of
the 8634 processor has been a winning point for
carriers picking SIGM. The 100 percent market share
SIGM currently enjoys for Microsoft (MSFT) based
IPTV service is only a matter of time before there is
second chip certified and on the market.
• SIGM has an exclusive agreement with UTStarcom
(UTSI) in providing processors for UTSI set-top
boxes. UTSI is the sole equipment provider in Brazil,
India, and market leader in China.
• Blu-ray had brisk sales during the holiday shopping
season compared to HDDVD. During the holiday
shopping season it was hard to miss the shelves of
sold out blu-ray DVDs at any retailer. More content
and players manufactured resulted in higher sales
figures and not a glut on the market.
• We are reiterating our Strong Buy Rating on SIGM and
$100 price target. The Street seems to be overly
concerned with competition and not paying much
attention to the happenings at SIGM who is staying
ahead of the curve.

http://www.knobias.com/research.pdf?id=12464

[la-onda]

Sigma Designs pullback to 1-mo. low creates 'opportunity' -- Deutsche Bank
Wednesday, December 26, 2007 13:46ET

By Staff Reporter

NEW YORK, Dec 27, 2007 (Thomson Financial via COMTEX) -- Shares of Sigma Designs Inc. extended losses to a one-month low Wednesday a pullback that Deutsche Banks says has created a "solid entry opportunity" for new investors.

The stock was down 4.7% at $54.11, and has lost 25% since closing at an all-time high of $72.17 on Dec. 10. The stock hit a low of $53.50 in intraday trading Wednesday, the lowest price seen since Nov. 27.

Analyst Sukhi Nagesh said that while there are expectations that Broadcom Corp. and STMicroelectronics will announce competitive products as early as at the Consumer Electronics Show in Las Vegas starting on Jan. 7, but that it typically takes 10 to 12 months from product announcement to a fully-tested and working set-top box. Nagesh said he doesn't see any meaningful risk to his 2008 forecasts for Internet-protocol TV deployments, especially on the Microsoft platform.

"Given the recent pullback, we believe the expected new product announcements by Sigma Designs' competitors to now be fully reflected in the stock," Nagesh said in a research note. "In addition, we believe Sigma Designs itself is likely to make new product announcements at CES."

He reiterated the stock's buy rating and $75 price target.

[Garoh]

Hi

It's another chance to get in this stock for those that haven't bought it yet ..
$57-$57.5  will be a one time offer 

I'm waiting for it . It should perform very well soon .

I hope you're right (again) Garoh, SIGM has been the ugly duck of the Main Portfolio over the last few days.
I went for a higher degree of safety here, buying a $1.5 B plus market cap company, and so far what I have is a 16.9% loss on the head Technically nothing unusual or trend changing has happened, just a normal correction.

Fundamentally there's a lot of controversy, not with the company itself, but with shares. People are scared by the proposed increase in the # of authorized shares from the current 37 million to 102 million (I personally believe the company will announce a stock split, but I'm not sure) and also because insiders have been selling shares ... there's a good post on Yahoo Finance about insiders selling SIGM:

Insiders are NOT "dumping"

The company reported $0.72 EPS in Q3 2007 and it gave guidance saying Q4 will be even better:

«The Company expects a continued increase in demand for its products with 10% to 15% growth in net revenues for the fourth quarter compared to the previous quarter.»

I'd say EPS in Q4 2007 will be about $0.80 ... analysts expect $0.82.

Anyway, the real issue around SIGM are profit margins:



You see, analysts expect 56.5% revenue growth in fiscal 2008, but just 5.3% growth in EPS. This would mean a sharp reduction in gross and net profit margins, which were 53.2% and 31.2%, respectively, in Q3 2007.

Historically SIGM's gross margin has been between 48% and 52%, and management expects that to continue:

«While the Company's gross margin has been stronger than expected in recent quarters, the target remains 50% within a range of 48% to 52%.»

And what about net profit margin? Well, the tax rate was just 12.2% in Q3 2007. This is much lower than average and probably it has to do with tax loss carry forwards. If the tax rate were a more "normal" 40%, then net profit margin would be reduced by about 10 percentage points to 21.6%. With a 21.6% net profit margin and $344 M in revenue, fiscal 2008 net income would then be $74 M. If we consider the share count will rise 10% this would mean EPS of $2.32, below the $2.60 expected by analysts for fiscal 2008.

With $2.32 EPS the forward p/e would be 24.5, which seems expensive, given that EPS would be lower in 2008 than in 2007.

SIGM reminds me a lot of NVTL and SWIR, stocks in a hot industry within the technology space. Suddenly competition kicks in, margins are compressed and the earnings multiple is reduced. NVTL and SWIR were cut in half recently ... if the same thing were to happen with SIGM we would then see $36.5 a share in the near future.

I guess my first impression of SIGM was the right one and then I got overly enthusiastic about the outstanding 3rd quarter results, not looking into the future or the tax rate issue.

If I wanted to get advantage of  the IPTV trend I should have bought SIGM in the $10 - $30 range. At $68 I was paying too much, getting in late on the technological cycle.

Trading Plan:

I opt to take a loss on SIGM while it's small. The trading plan for SIGM is SELL.

Oops

Sorry I was too busy to reply yeterday 
David Yes as I mention that it was a good chance to get in this stock Not to get out 
Well , what I see now is a very nice chart on weekly and daily with at least $73 price target . I neve buy at the top , otherwise my hands will be weak .
David If you have time you can look at these nice stocks which I've been holding since Sepetmber .
MTL
TKC
CF
VIP
AG
Very strong stocks and all of them are running in an uptrend channel .
I'm holding SIGM now .

[David Randolph]

David Yes as I mention that it was a good chance to get in this stock Not to get out   

I know you said it was a good time to buy, but I still thought it was a good (or at least, not so bad) time to sell.

Well , what I see now is a very nice chart on weekly and daily with at least $73 price target.

The chart was nice, but fundamentals were not, at least not in my view. The stock yesterday closed 22.5% below my selling price just a few days ago (and I lost 17% on this trade).

SIGM taught me to always pay attention to the influence of taxes in EPS results and net profit margin, because the low tax rate probably won't be there in the near future.

SIGM reminds me a lot of NVTL and SWIR, stocks in a hot industry within the technology space. Suddenly competition kicks in, margins are compressed and the earnings multiple is reduced. NVTL and SWIR were cut in half recently ... if the same thing were to happen with SIGM we would then see $36.5 a share in the near future.

Will SIGM drop to $36.5 in the future? I don't know, but I'm not bullish on the stock.

Are you still holding garoh? If you are, I wish you very good luck and thank you for expressing your views. Only people that never make a point about a stock are never wrong.

[David Randolph]

SIMG got even cheaper, but it appears it's trending higher now, as you can see in the chart below.

The volume and price spike in mid February was due to the following news:

• Silicon Image Jumps; Two Firms File 13-Gs
at Barron's Online (Wed, Feb 13)

[David Randolph]

I'm glad I took that relatively small loss on SIGM (sold at $56.82) as I was expecting the stock to go down to the $36 area, but $20?

The stock closed yesterday at just 10.5 times the 2008 EPS average estimate.

What happened in point 1?

• Sigma Designs Plunges on 1Q Outlook
AP (Thu, Mar 13)

Remember the following?

Fundamentally there's a lot of controversy, not with the company itself, but with shares. People are scared by the proposed increase in the # of authorized shares from the current 37 million to 102 million (I personally believe the company will announce a stock split, but I'm not sure) and also because insiders have been selling shares ...

I don't see any stock split ...

I guess management is diluting shareholders value in a massive way, even more than what they did historically. This will probably mean the EPS estimates are still high, not because net income will be lower (also a possibility), but because the # of shares outstanding is rising rapidly.

I'll keep SIGM on the Watch List, it seems like an obvious buy from a fundamental standpoint (because the earnings multiple is so low), but the Devil lies in the details, and that increase in the number of authorized shares to the triple has "trouble ahead" written all over it.

[la-onda]

Analysts Maintain Sigma Designs'
Position on Set Tops Despite Competitive Fears Trading on Sigma Designs, Incorporated (SIGM) was up 11.104% following Deutsche Bank's maintained buy rating on the belief that fears of
Broadcom gaining market share on IPTV set top boxes was overblown.
Roth Capital also suggested that the company's position in IPTV remains secure, as Broadcom has yet to be designed into a single set top box that supports Microsoft Mediaroom software. According to Infonetics Research, the worldwide IPTV subscriber base is expected to grow
from 12.7M in 2007 to 97.2M in 2011, representing a compound annual growth rate of 66%. Currently, IPTV set-top boxes use one of two platforms based on software developed by either Microsoft or various Linux providers, each of which offers certain advantages and disadvantages.
For set-top boxes in the IPTV market, Sigma is currently the only provider qualified to ship digital media processing solutions based on the Microsoft IPTV platform. In the high definition DVD player market, its suite of software for Blu-ray players is the most comprehensive offering
available to date. It has built this position by being one of the first multimedia processing semiconductor providers to work extensively with both IPTV and high definition DVD player providers, as well as telecommunications carriers to design solutions that address specific feature and performance requirements. Through this, Sigma has gained insight
into the challenges of its customers and such carriers, as well as visibility into their product development plans. Fears of competitive pressures, however, may have been stoked by the company's admission that its competitors have higher profiles, larger financial resources, and
greater marketing resources, and may develop a competitive product which inhibits the wide acceptance of Sigma's products. Currently, other manufacturers are developing products that will compete directly with its products in the near future.

chart: