Benchmark Captial Gives Earnings Forecast Update On Sigma Designs

Following Q4 FY11 results, Benchmark is maintaining a “Hold” rating on Sigma Designs

. Sigma's shares currently trade with a compelling valuation. However, with Sigma conceding IPTV media processor market share throughout much of CY11, few catalysts are in place. Benchmark also remains concerned about the sustainability of Sigma's HomePNA chipset sales due to converging standards. Given that Sigma is losing IPTV media processor market share, Benchmark is trimming its FY12 revenue and EPS estimates. Because Sigma's market share in the IPTV, media processor market should drop from 75% to roughly 50%, Sigma is expecting soft 1H FY12 revenue. Benchmark's FY12 revenue estimate drops from $271.5 million to $259.7 million. Benchmark is decreasing its FY12 non-GAAP EPS estimate from $1.01 to $0.91. While Sigma's shares will likely experience minimal downside should the market decline, shares will likely underperform other chip stocks if the market rallies because of the lack of Sigma- specific catalysts. SIGM closed Wednesday at $13.70