The below is from a CSFB 'Austin Bus Tour Highlights' research report regarding SGTL (they also commented on SLAB and FSL). The report is from mid-May.
fyi...
Sigmatel Inc. (SGTL, $24.65, NOT RATED [V])
• Diversification efforts picking up. SigmaTel is now spending 30% of
development resources outside the core digital audio business. The company is
focusing on diversifying into related consumer markets, including PDAs, DVB
players, satellite radio, digital cameras, PC audio, and surveillance systems.
• Wireless technologies represent the next leg of development. SigmaTel is
heightening focus on RF integration of bluetooth and cellular technologies.
The company has put RF integration on its roadmap for its 3800 product
scheduled to sample in H206. SigmaTel also noted that it would selectively
consider M&A to jumpstart RF integration plans. The company is also
accelerating efforts to migrate its technology for use in handsets as a media coprocessor,
although we note that long 12-18 month handset design cycles
likely push this opportunity into 2007.
• Core audio business still drives revenues through 2006. Despite diversification
initiatives, Management conceded that the core audio business will likely
remain over 80% of revenues through 2006. It remains upbeat that the flash
based audio market could reach 70-80 million units in 2005 and grow a further
50-60% in 2006. With unit shipments reaching 14 million in 1Q and market
share around 70%, that could imply 1Q run-rates remain relatively constant
through the year unless the market accelerates further or customers build above
consumption in H205.
• Business trends on track – top two customers factored in. SigmaTel indicated
that it factored potential inventory overhang at Creative (20% of revenue) and
Asustek (24% of revenues) into its guidance. Although still early in the
quarter, we believe trends are largely on track quarter to date.
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