Tom Dashole is saddened
Posted on 04/21/2004 6:48:14 AM PDT by Arrowhead1952
Designer and marketer of chips used in MP3 players plans to hire more engineers.
By Kirk Ladendorf
AMERICAN-STATESMAN STAFF
Wednesday, April 21, 2004
A year ago, SigmaTel Inc. was pinching its pennies as it worked toward making a profit selling chips for portable MP3 music players.
These days, the company, flush from proceeds from two public stock offerings, is solidly in the black and aiming to expand its engineering staff almost as quickly as it can find qualified candidates.
"First you survive, and then you thrive," CEO Ron Edgerton said Tuesday. "We are thriving, and we expect to thrive even more going forward."
Austin-based SigmaTel, which dominates worldwide sales for chips that run MP3 players, posted a first-quarter profit of $6.9 million, or 18 cents a share, on revenue of $31.5 million for the first quarter, which ended in March. Sales were up 145 percent from the first quarter of 2003, when the company had a loss of $8.8 million; that included an $8.2 million preferred stock dividend.
Shares of SigmaTel rose 6.4 percent to $24.95 prior to the earnings report. In after-market trading, shares rose an additional 2.2 percent.
The chip designer and marketer, which kept tight controls on costs before its IPO in September, now has $121.6 million in cash and short-term investments and plans to add 20 workers a quarter, mostly engineers, this year. The company has 160 workers now.
Most of its new workers will be in Austin, where SigmaTel has its main engineering center.
Quarterly sales stayed strong despite the late January slowdown in economic activity in China resulting from celebrations of the lunar new year. More than 30 percent of SigmaTel's sales are in China.
The company expects stronger sales in the current quarter, in the range of $34 million to $36 million, and stronger net income of between $8 million and $8.9 million.
Edgerton said he anticipates continued strength in the MP3 player market but wants to expand the company's product portfolio and lessen its dependence on MP3 chips, which accounted for 80 percent of sales during the quarter.
The company also makes audio chips for portable computers and chips that control portable storage devices, sometimes called "thumb drives," that link to the personal computer.
"We are just being prudent and diversifying," Edgerton said. "We would like to be a much larger company, and we have shown we can be successful in competitive markets."
The company won't disclose which new markets it will target, but it plans to leverage its experience in designing low-power chips that use "mixed-signal" technology, which incorporates both analog and digital circuitry on a single device. The company expects to introduce some products in new markets by early next year.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.