UPDATE 2-Sigma Designs Q4 earns miss market view; shares fall

(Recasts, adds details, analyst's comment)

By Purwa Naveen Raman

BANGALORE, March 12 (Reuters) - Chipmaker Sigma Designs Inc (SIGM.O) reported fourth-quarter earnings that slightly missed Wall Street estimates, due to a drop in its gross margins, and forecast a sequential decline in first-quarter revenue.

Shares of the company, which makes chips for Internet Protocol television set-top box market and Blu-ray players, fell 10 percent to $22.80 in after-market trade, after closing down more than 5 percent at $25.26 Wednesday on the Nasdaq.

Sigma said in a conference call that it expects first-quarter revenue of $60 million, citing one-time adjustment in demand from a major customer.

BWS Financial Inc analyst Hamed Khorsand said the company could be referring to Motorola Inc. (MOT.N).

The customer may have been buying ahead of demand in third and fourth quarter and ended up having a lot more set-top boxes than the actual demand, Khorsand said by phone.

Analysts expected revenue of $76.3 million, according to Reuters Estimates.

Sigma, which competes with Broadcom Corp (BRCM.O) and STMicroelectronics (STM.PA), however, said it expects the sequential revenue growth to resume in the second quarter.

For the fourth-quarter, the company's net income jumped to $35.3 million, or $1.12 a share, from $4.6 million, or 17 cents a share, a year ago.

Excluding one-time charges and a $12.7 million gain related to the release of a tax valuation allowance, the company reported earnings of 80 cents a share.

Net revenue rose 145 percent to $76.4 million, driven by higher demand from the set-top box market.

Analysts were expecting the company to earn 83 cents a share, excluding items, on revenue of $75.5 million.

Gross margins fell to 49 percent from 51.3 percent from the year-ago quarter. (Reporting in Bangalore; editing by Anil D'Silva))