Shares of Sigma Designs Inc. fell Wednesday after an analyst downgraded the chip maker on signs that it's losing greater-than-expected market share to rival Broadcom Corp.
Collins Stewart analyst John Vinh downgraded Sigma to "Sell" from "Hold," saying checks in the system indicate that the Cisco Systems Inc. and Motorola Inc. will buy chips exclusively from Broadcom next year for next-generation set-top boxes enabled to receive TV over the Internet.
Vinh set a share price target of $9. Shares of Sigma, based in Milpitas, Calif., stood at $10.84 in afternoon trading, down $1.50, or 12.2 percent.
The analyst said chip shipments for these set-top boxes account for half of Sigma's Internet protocol TV revenue. He expects a $60 million hit to Sigma's revenue in fiscal 2011 as a result of the market share loss.
Vinh lowered his fiscal 2011 revenue estimate to $239 million from $255 million, and earnings forecast to 68 cents per share from 71 cents.