Sigma Designs Shares Dive After 1Q Results

NEW YORK (AP) — Shares of Sigma Designs Inc. tumbled Thursday after the company reported a 58 percent decline in quarterly profit the day before.

The chip designer's adjusted earnings and sales actually topped Wall Street expectations for the quarter.

But shares nevertheless dropped $1.75, or 10.5 percent, to $14.88 in afternoon trading.

Collins Stewart analyst John Vinh has a "Buy" rating on shares but pointed to several factors that could be dragging on the stock.

Shares were up to begin with by about 75 percent year-to-date. "The stock ran pretty hard ahead of the quarter," Vinh said in an interview.

On top of that, revenue from chips for Internet Protocol Television (IPTV) devices, which accounts for more than two-thirds of the company's sales, was down from the quarter before. (The technology allows TV content delivery through an Internet connection.)

And revenue guidance, while slightly ahead of the average forecast, came in flat from the first three months of the year.

In a conference call with analysts Wednesday the Milpitas, Calif., company did not give specific figures for the second quarter. Chief Executive Thinh Tran said the company expects similar revenue and gross margin as the first quarter.

Analysts were looking for $49.6 million, according to a Thomson Reuters poll, compared with the first-quarter's $51.2 million.

In a note to clients Wednesday, Deutsche Bank analyst Sukhi Nagesh called the company's forecast "tepid," reiterating a "Hold" rating.