We have recently added small cap video chip stock Pixelworks, Inc (NASDAQ: PXLW) to our SmallCap Network Elite Opportunity (SCN EO) as it stands to benefit from the growth in connecting HD quality video across all mobile device platforms, as well as Smart TVs; but Silicon Image, Inc (NASDAQ: SIMG) and Sigma Designs, Inc (NASDAQ: SIGM) are also providing chips for the video or entertainment markets. Moreover, all three of these small cap stocks have recently reported earnings that might leave you feeling even more bullish.
What You Need to Know About PXLW, SIMG and SIGM
Here is what you need to know about all three small cap video chip stocks and their latest earnings reports:
- Pixelworks, Inc. A fabless semiconductor company, Pixelworks designs, develops and markets innovative video and pixel processing chips and software for high-end display applications, including digital projection, large screen LCD flat panels and digital signage. A week ago, Pixelworks reported a 15.5% sequential revenue increase to $9.6 million verses $15.5 million in revenue for the same period last year. The sequential increase was due to higher sales of chips for both Projectors and TVs while the decline was the result of lower licensing revenue during the second quarter. Nevertheless, the company CEO was quoted as saying:
“Growth resumed in the second quarter as order patterns improved, and we expect a significant increase in third quarter revenue driven by an improving environment, ramping of the PA168 advanced video processor and success in our licensing initiative. We are seeing outstanding demand for Pixelworks’ Video Processing Technology, which is proving to be essential for delivering the highest video quality as resolution requirements increase across a growing number of displays.”
- Silicon Image, Inc. A provider of connectivity solutions that enable the reliable distribution and presentation of high-definition content for mobile, consumer electronics and PC markets, Silicon Image delivers its technology via semiconductor and intellectual property products that are compliant with global industry standards while its products are deployed by the world’s leading electronics manufacturers in devices such as mobile phones, tablets, DTVs, Blu-ray Disc™ players, audio-video receivers, digital cameras, as well as desktop and notebook PCs. Near the end of July, Silicon Image reported a 19% sequential revenue increase to $73.7 million and a 15% year over year increase plus GAAP net income came in at $4.3 million verses a net loss of $0.6 million. The company’s CEO noted:
“During the quarter we saw continuing adoption of our MHL connectivity solutions in mobile devices, our CE business stabilized with MHL’s advance into DTV and home theater markets, and we made solid progress in realizing the goals we set for our 60GHz wireless technology.”
In addition, Silicon Image announced a new share repurchase plan as a follow-on to its current plan (which currently has $10.3M remaining for repurchase). When the existing plan concludes, the company will commence a new share repurchase plan to repurchase up to $50 million in stock.
- Sigma Designs. A provider of system-on-chip (SoC) solutions used to deliver entertainment and control throughout the home, Sigma Designs offers both highly integrated SoC solutions as well as stand-alone chips that functions like media processing, smart TV, video encoding, wired and wireless networking, video processing and home control. Back in June, Sigma Designs reported its first quarter of non-GAAP per-share profit in two years, but still came up short of Wall Street's expectations plus its guidance seemed to indicate growth might slow. Specifically, Sigma Designs reported a 30% revenue increase to $52.5 million along with Non-GAAP net income of $0.3 million verses a non-GAAP net loss of $16.8 million. The company CEO noted that they are “continuing to execute on our plan to achieve our targeted $45.0 million cost reduction plan for fiscal 2014." However, Sigma Designs anticipates second-quarter revenue between $52 million and $54 million – meaning results would be slightly below its first-quarter performance if it comes in at the low end of that range.
Stock Performance: Pixelworks vs. SIMG and SIGM
On Tuesday, small cap Pixelworks fell 1.8% to $4.37 (PXLW has a 52 week trading range of $2.11 to $5.30 a share) for a market cap of $82.33 million plus the stock is up 100.5% since the start of the year, up 43.3% over the past year and up 138.8% over the past five years. Silicon Image is up 15.3% since the start of the year, up 6.6% over the past year and down 17.5% over the past five years while Sigma Designs is up 5% since the start of the year, down 21.9% over the past year and down 68.7% over the past five years:
For technicians and investors who like looking at technical charts, here are the latest technical charts for all three small cap video chip stocks:
The Bottom Line. Given the recent upbeat earnings reports from small cap video chip stocks Pixelworks and Silicon Image, both are looking like they are in pretty good shape for investors while Sigma Designs warrants a closer look as it could end up surprising expectations the next time it reports earnings.
SmallCap Network Elite Opportunity (SCN EO) has an open position in PXLW. To find out what other open positions SCN EO currently has, and to learn why so many traders and investors are relying on this premium subscription service, click here to find out more.