Sigma Designs, Inc. Reports Second Quarter Fiscal 2011 Results

MILPITAS, Calif. — (BUSINESS WIRE) — August 25, 2010 — Sigma Designs®, Inc. (NASDAQ: SIGM) (“Sigma”), a leading provider of highly integrated system-on-chip, or SoC, solutions used to deliver multimedia entertainment throughout the home, today reported financial results and business highlights for its second fiscal quarter ended July 31, 2010.

Net revenue for the second quarter was $73.3 million, up $8.1 million, or 12%, from $65.2 million reported in the previous quarter and up $22.0 million, or 43%, from $51.3 million reported for the same period last year.

GAAP net income for the second quarter was $0.5 million, or $0.02 per diluted share. This compares to GAAP net income of $1.1 million, or $0.04 per diluted share, for the previous quarter and $4.8 million, or $0.18 per diluted share, in the same period last year. In the second quarter, Sigma wrote off $5.2 million associated with a strategic investment in a privately held company which reduced Sigma’s net income after taxes for the quarter by approximately $0.10 per diluted share.

At the end of Sigma’s second quarter, cash, cash equivalents and marketable securities totaled $163.9 million, or $5.24 per share outstanding, an increase of $16.0 million, or $0.45 per share outstanding for the first half of this fiscal year. This increase was primarily generated by profits from Sigma’s operating activities.

Non-GAAP net income for the second quarter was $8.2 million, or $0.26 per diluted share. Excluding the $5.2 million investment write-off, Sigma’s non-GAAP net income for the second quarter would have been $11.6 million, or $0.36 per diluted share. This compares to non-GAAP net income of $9.2 million, or $0.29 per diluted share for the previous quarter and non-GAAP net income of $8.0 million, or $0.29 per diluted share during the same period one year ago. Non-GAAP adjustments for the second quarter consisted of $4.6 million in amortization expense for acquired intangibles related to acquisitions, $3.1 million in non-cash share-based compensation expenses and $0.1 million of gross profit reduction resulting from the mark-up on inventory purchased as part of Sigma’s Zensys acquisition. The reconciliation between GAAP and non-GAAP net income for all referenced periods is provided in a table immediately following the GAAP financial tables below.

Management Comment

“We are pleased to report over $73 million in revenue for the second quarter, representing more than 12% growth over our first quarter, with contributions from all three of our primary business segments. Our largest increase came from sales in our IPTV media processor segment, representing the bulk of this quarter’s growth, and reflecting a fundamentally strong market. Connected media players were also up this quarter and continue to provide a substantial revenue contribution, demonstrating the popularity of consumer products such as network players that enable Internet access for playback of over-the-top content. Likewise, revenues from our Home Connectivity Business Group were up, largely a result of our continued leadership in all-wire network solutions. Moving forward, we are continuing to pursue major design wins in our current market segments with special initiatives for penetrating the hybrid IP Cable set-top box industry and the increased adoption of Z-Wave based home control solutions,” stated Thinh Tran, chairman and chief executive officer, Sigma Designs.

Second Quarter Highlights

  • We announced the availability of the first low-cost Microsoft Mediaroom™ compatible set top box platform based on Sigma’s SMP8652 media processor SoC. SMP8652-based set top box designs have completed integration with Mediaroom client software and are anticipated to begin deployment with leading carriers in the second half of 2010. The first to market will be Tatung, with its recently approved SMP8652-based set top boxes.
  • We announced the industry’s first MIMO (multiple input, multiple output) features over power line communications chipsets. Early MIMO functionality will first deploy in the Sigma CG2110 HomePlug AV solution and is designed to deliver up to twice the performance of existing power line solutions when later used in conjunction with the new ITU standard, G.hn.
  • We jointly announced that ViewSonic’s new VMP74 and VMP75 Media Players, supporting a host of new entertainment features, are based on Sigma’s SMP8650 series media processor SoC products.
  • We announced that leading French broadband provider, Free Inc., using Sigma’s SMP8634 Secure Media Processor, was delivering 3D broadcasts of World Cup soccer and ongoing 3D broadcast content in its industry-leading Freebox triple-play set-top boxes. Free’s 3D broadcast was the very first 3D television broadcast in France and one of the first in Europe.
  • We announced that Sigma’s HomePNA-based chips have been selected to deliver broadband networking solutions to MDU residents -- spanning apartment buildings, condominiums and townhomes -- using Mototech equipment. Sigma chips, using Fast EoC™ (Ethernet over Coax) technology, enable Mototech to deliver broadband services to MDU residents on what Sigma believes to be a more cost effective basis than any other EoC solution available.

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