Sigma Designs falls as analyst sees market share loss

Sigma shares plunged after Robert W. Baird & Co. analyst Tristan Gerra said his checks indicate that competitor Broadcom Corp. won a contract to supply chips for Internet television set-top boxes.

The boxes allow users to download films on the Internet and watch them on television.

Gerra said he expected Sigma to lose market share on Internet television contacts with major telecommunications companies including AT&T and British Telecom.

He dropped his sales estimate for the second quarter ending in July to $71 million from $79 million.

He also reduced his price target to $26 from $30 and maintained his "Neutral" rating.

However, Sigma spokesman Ken Lowe said Broadcom is a substantial Motorola supplier and it was only natural that it would try to increase its sales with the company.

"It's really not news to us," he said.

Lowe also said he didn't believe that AT&T and other Internet television suppliers had made any new selection on chips for their products.

Sigma supplies chip sets to AT&T and expects that the telecommunications company would draw its Internet TV chip supply from more than one source, he said.