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Tuesday, November 07, 2006

Calls of Note Part 2

- Baird believes Sigma Designs (NASDAQ:SIGM) is very well positioned to enjoy new multi-year product cycles including a first- to-market position in Ultrawideband, the basis for three standards and representing a large market potential. Microsoft IP STBs just starting to ramp. Cable STBs to start migrating to H.264/VC1 late next year. HDTV another large opportunity as Sigma offers the only integrated H.264/VC1/video processor with security layers on the market. Raising price target to $26 from $21.

Ultrawideband, a new multi-year product cycle for Sigma. First to market with a CMOS-based UWB solution, Sigma is potentially targeting high-volume opportunities in PCs and mobile applications.

Cable set-top boxes to start migrating to H.264 in 2007/2008. Motorola and other key set-top box vendors currently using Sigma Designs' decoders engaged in discussions with cable operators to integrate H.264- VC-1 in next-generation set-top boxes.

In IP set-top boxes, Sigma's momentum in previous quarter was all non-Microsoft. Revenues from Microsoft-based wins ramping starting in October quarter - all tier-one telcos. UTSTarcomm momentum also picking up.

In HDTV, no one but Sigma offers a video processor integrating H.264/VC-1 and the security layers compatible with Microsoft's DRMs. With the migration to lower geometry nodes, Sigma could be a major play in the HDTV market starting in 2007.

Blu-Ray DVD players: six wins for Sigma, three ramping starting this year.

Notablecalls: Were the stock trading around $15-$16 I'd recommend buying aggressively. Following the recent 3-month run I'm not so sure. In case you do buy, keep it on a tight leash as I think we may be pretty close to a medium-term top.

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