Today the market has been up and sideways basically, perhaps a little more defensive this afternoon,...
TV Goes Hi-Tech
02/02/2007 12:00 am EST
Always looking to capture gains from future trends, popular speaker and editor, Tobin Smith, is predicting great things to come for this company, currently enjoying a virtual monopoly in the soaring Internet protocol TV industry...
"We have been patiently waiting for Sigma Designs (SIGM NASDAQ GM) , the leader in Internet protocol television (IPTV) chips to cool off, correct its stock price and give us a chance to double our money in the IPTV wave by 2008.
"Now we have gotten the correction--and it's time to strike. Sigma is clearly destined to become one of the great niche semiconductor stories of the early 21st century. Sigma Designs, and its laser-like focus on silicon-based digital video processors, is the brains behind IPTV, or video-over-IP technology used in TV set-top boxes. And its virtual monopoly status and one-year advantage over its competition has only now started to pay off investors.
"The firm specializes in producing high-performance System-on-a-Chip semiconductors for use not only in IPTV, but also in HDTVs, digital media adapters, portable media players, and DVD, Blu-ray and HD-DVD players and recorders.
"The IPTV wave is growing at annual rates of 50%-150% in Europe and Asia, thanks to the Microsoft IPTV platform (MSTV). And the only media processor used inside MSTV is Sigma's. Although STMicroelectronics (STM) will enter the market as a second source in 2008, it is likely that 80% of units will still ship with SIGM-based media processors.
"Following the AT&T-SBC Communications merger, we should see IPTV service explode in the US. AT&T expects to offer an IPTV service to 50%+ of its total current customers (over 50 million) by the end of 2008. All these services require SIMG chips in digital boxes.
"SIGM offers the only pure-play on the forecasted global expansion of IPTV services. I view Sigma's growth forecasts as very conservative.
"Most important for us in the short-term is that the "bad news" about SIGM should go away soon. Yes, Sigma is one of at least 197 companies that have launched internal probes or are under review by federal regulators for possibly backdating stock option grants, but t he options witch hunt will likely be resolved by its March filings--and that removal should be the short-term catalyst for the stock.
"Once the stock soars above $29, its all clear air--and I expect dozens of set-top IPTV box wins to hit over the next months and quarters.
"Get the Intel of high-def IPTV boxes now under $25--our target of $45 is very doable and may even understate growth."
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