Collins Stewart cuts Sigma Designs to sell, shares fall

(Reuters) - Collins Stewart downgraded shares of Sigma Designs Inc (SIGM.O) to "sell" from "hold" on concerns of a greater-than-anticipated market share loss to rival Broadcom Corp (BRCM.O).

Shares of Sigma Designs, which makes chips for the IPTV set-top box market and Blu-ray players, were down 7 percent at $11.45 in morning trade on Nasdaq.

The brokerage's checks indicate that Cisco (CSCO.O) and Motorola (MOT.N) will move exclusively to Broadcom's technology for Microsoft Corp's (MSFT.O) new version of internet protocol television (IPTV) set top boxes in second quarter of calendar year 2010, analyst John Vinh said in a note.

Motorola and Cisco have been using Sigma's digital media processor system-on-a-chip to make set-top boxes, which use Microsoft's IPTV platform.

Vinh expects Broadcom to get 70 percent market share of Microsoft IPTV shipments in 2010.

"Microsoft IPTV set top box related shipments account for half of Sigma's IPTV revenues. We estimate a $60 million impact on fiscal 2011 (Jan) revenue," said the analyst, who has a price target of $9 on the stock.

(Reporting by Shrutika Verma in Bangalore)