This is a tale of two perspectives.
Media processing chip designer Sigma Designs (Nasdaq: SIGM ) just reported first-quarter results that look weak compared with the same period a year ago, but pretty strong next to last quarter's underwhelming haul.
Net sales added up to $51.2 million, which was down 10% year-over-year but up 8% from last quarter. Gross margins bounced back by 250 basis points (or 2.5% in plain English) to 47.6%, but still slide below the 49.3% margins of yesteryear. On the bottom line, $0.10 of GAAP earnings per share look bad in either comparison, but one-time tax shenanigans explain much of that anomaly. In plain operating terms, this quarter was -- again -- better than the last but not as good as the 2008 equivalent.
From a short-term point of view, things are looking up. On a longer time scale, Sigma isn't quite back to normal yet. That's a snapshot of a bouncing ball, right after it comes off the ground again.
If that sounds like a familiar story by now, you've been following our coverage of the chip industry very closely. This bounce off an apparent market bottom is a common pattern among big names like Texas Instruments (NYSE: TXN ) and Intel (Nasdaq: INTC ) , as well as among smaller fry such as Taiwan Semiconductor Manufacturing (NYSE: TSM ) and Brocade Communications Systems (Nasdaq: BRCD ) .
What makes Sigma's situation unique is that the swings from high to low and back again are smaller than most. That's because the company serves some rather stable markets, far removed from the fickleness of cell phone shopping and other high-priced gadgetry.
If you buy a Blu-Ray player or order a digital cable box today, chances are pretty good that Sigma had a finger or two in the making of that device. And as broadcasters like Comcast (Nasdaq: CMCSA ) and DirecTV (Nasdaq: DTV ) have shown us, that particular subsector seems to do OK in this recession. And with the impending switch to all-digital TV signals, Sigma's addressable market will stay large and growing for years to come.
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