Sigma Design (SIGM) update

We haven’t written a lot about this company lately, as not much has happened. We argued earlier that it would probably form a bottom around $15. It temporarily went a little lower, but it has bounced back and the stock is now sitting against it’s 50 day moving average. Here’s the chart:

What’s been going on? 

  • Sigma was downgraded from $48 to $20 by UBS in early June on slower business and lack of a near-term catalyst
  • Sigma came out with a new chip, the CoAir. It seems a very nice combination of features, summed up in the pr:
  • Sigma’s CoAir chipset is the only technology available in the world today that can simultaneously deliver multiple independent streams of video and data over coax cable, Ethernet cable and wirelessly without compromising quality of service and throughput. It is a high performance “wireless” and “no new wires” solution that can stream abundant content wirelessly and over existing coax and Ethernet wires for additional whole home coverage, up to 330 ft.
  • However, all is not well. the CoAir chipset uses ultra wideband (UWB) technology for the wireless high capacity capabilities, and despite this technology having some unique features, it now looks like this bet might not pay off. An industry consortium looks to chose a different standard, the Wireless Home Digital Interface, or WHDI, which is a variant of a WiFi standard (802.11n, if you must know)
  • sends uncompressed, high-definition video signals over the unlicensed 5-Gigahertz band. The backers of it say its immune to obstructions like walls and can deliver a signal that covers an entire home–that means setting up a set-top box in a basement and connecting it wirelessly to a 1080p TV in an upstairs bedroom.
  • Now, this standard is not guaranteed to win, there are alternatives: “WirelessHD is one: it uses the 60-Gigahertz band to send high-def video between devices, though it is limited to one room and can’t go through walls. But it does have some of the same vendors on board, like Sony and Samsung. There’s also ultrawideband solutions, but they’ve had more trouble getting off the ground.”
  • But it makes life just a little bit more difficult for Sigma.
  • However, there also seems to be a little bit of good news; Blue-ray players are finally taking off, at least in Japan.

Our verdict: we want to see it above that 50 day average, and we are generally very wary of buying stocks in the present environment.