SAN FRANCISCO Troubled media IC vendor SigmaTel Inc. Thursday (Jan. 4) slashed guidance for the recently concluded quarter and announced the resignation of the company's top officer.
SigmaTel (Austin, Texas) said it now expects revenue for the fourth quarter of 2006, ended Dec. 31, to be roughly $37 million to $38 million. The company had previously said it expected fourth quarter revenue to be between $41 million and $46 million.
SigmaTel said Ronald Edgerton resigned as SigmaTel's chairman, president and CEO and left the company's board in order to spend more time with his family. Edgerton had been CEO for seven years. Last month, Ross Goolsby, SigmaTel's chief financial officer, abruptly stepped down from his post.
SigmaTel blamed the revenue shortfall on soft demand from OEM customers and a slowdown in sales late in the quarter by Chinese original design manufacturers, whose customers are European brands. The company is scheduled to release its fourth quarter 2006 financial results on Feb. 1.
William Osborne, a member of SigmaTel's board since 2001, has been elected chairman and Phillip Pompa, senior vice president of the company's portable systems group, has been appointed as the interim CEO, SigmaTel said. Pompa was formerly a vice president of marketing at Advanced Micro Devices Inc. Osborne is dean of the college of engineering at Southern Illinois University-Carbondale.
SigmaTel has been in a tailspin since last year, when it reportedly lost a coveted MP3 decoder chip socket in Apple's iPod shuffle music player to Samsung Electronics Co. Ltd. Last October, the company cut 14 percent of its workforce.
Craig Berger, an analyst with Wedbush Morgan Securities, issued a research note stating that his firm view's Edgerton's resignation as a negative that suggests near-term turnaround for the company remains unlikely.
"We believe that SigmaTel's market opportunities continue to erode at a worrisome pace given continued commoditization of the MP3 chip market by [Chinese IC provider Actions Semiconductor and Taiwanese chip set house Ali], and given Apple's continued dominance of the U.S. market using Samsung and PortalPlayer decoder solutions," Berger wrote, adding that Wedbush recently said the company would be challenged to meet its fourth quarter revenue guidance.
Berger said Wedbush has increased its estimate of SigmaTel's 2006 loss per share to $1.33 from $1.26. The firm also expects a higher SigmaTel loss per share of 95 cents for 2007. Wedbush maintained its "hold" rating on SigmaTel stock.