News & Analysis
Sigma Designs cuts jobs, weighs sale of R&D programs
Dylan McGrath
10/31/2012 1:14 PM EDT
Comprehensive restructuring
Tran said the restructuring is designed to align the company's scale and workforce and other expenses with its markets products and financial plans. He described the restructuring plan as "comprehensive," including adjustments in all functional areas of the company and in all regions.
Sigma Designs said its plan would result in pro forma profitability on a quarterly basis assuming a quarterly revenue rate of $56 million. The company said it its expects to incur an initial restructuring charge of $1 million in the current quarter, primarily as a result of headcount reduction. The company expects to incur additional charges in coming quarters.
"Although we have taken and will take significant actions to reduce our expense levels, we believe our core strengths remain intact and poised to capitalize on opportunities in the major markets that we target, including IPTV and DTV, home connectivity, and home control and automation," Tran said.
For several months, Sigma Designs has been pressured by an activist hedge fund that maintains that the company's shares are undervalued. Last month, Sigma announced a loss in accordance with generally accepted accounting principles of $13.3 million for its fiscal second quarter, which closed July 28. It was at least the fourth consecutive quarter in which the company posted a GAAP net loss.
In the preceding two quarters, the company reported GAAP net losses of $13.7 million and $18.8 million, respectively. For the third quarter of fiscal 2012, which closed in November 2011, Sigma Designs posted a GAAP net loss of $121.6 million.
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Tran said the restructuring is designed to align the company's scale and workforce and other expenses with its markets products and financial plans. He described the restructuring plan as "comprehensive," including adjustments in all functional areas of the company and in all regions.
Sigma Designs said its plan would result in pro forma profitability on a quarterly basis assuming a quarterly revenue rate of $56 million. The company said it its expects to incur an initial restructuring charge of $1 million in the current quarter, primarily as a result of headcount reduction. The company expects to incur additional charges in coming quarters.
"Although we have taken and will take significant actions to reduce our expense levels, we believe our core strengths remain intact and poised to capitalize on opportunities in the major markets that we target, including IPTV and DTV, home connectivity, and home control and automation," Tran said.
For several months, Sigma Designs has been pressured by an activist hedge fund that maintains that the company's shares are undervalued. Last month, Sigma announced a loss in accordance with generally accepted accounting principles of $13.3 million for its fiscal second quarter, which closed July 28. It was at least the fourth consecutive quarter in which the company posted a GAAP net loss.
In the preceding two quarters, the company reported GAAP net losses of $13.7 million and $18.8 million, respectively. For the third quarter of fiscal 2012, which closed in November 2011, Sigma Designs posted a GAAP net loss of $121.6 million.
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resistion
11/1/2012 7:06 AM EDT
Sale of R&D. Thought I'd never hear it in the States.
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