Sigma Designs Inc (SIGM) has reported a 96.57 percent plunge in profit for the quarter ended Oct. 29, 2016. The company has earned $0.22 million, or $0.01 a share in the quarter, compared with $6.44 million, or $0.17 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $3.34 million, or $0.09 a share compared with $4.70 million or $0.13 a share, a year ago.
Revenue during the quarter went up marginally by 1.86 percent to $62.73 million from $61.58 million in the previous year period. Gross margin for the quarter contracted 58 basis points over the previous year period to 49.41 percent. Total expenses were 96.54 percent of quarterly revenues, down from 97.62 percent for the same period last year. This has led to an improvement of 108 basis points in operating margin to 3.46 percent.
Operating income for the quarter was $2.17 million, compared with $1.46 million in the previous year period.
“Our profitable third quarter was led by a healthy rebound in our Internet-of-Things revenue on top of our seasonally strong Smart TV business, strong gross margin performance, and lower operating expenses,” said Thinh Tran, president and chief executive officer of Sigma Designs, Inc. “We remain encouraged by our outlook for the Internet-of-Things business, which should continue to grow as consumer adoption of Z-Wave enabled products improves. For the long-term, we expect to capitalize on the multitude of new opportunities across our business to drive revenue, and combine this execution with cost reductions, in order to deliver stronger earnings.”
Working capital declines
Sigma Designs Inc has witnessed a decline in the working capital over the last year. It stood at $102.20 million as at Oct. 29, 2016, down 13.52 percent or $15.98 million from $118.18 million on Oct. 31, 2015. Current ratio was at 3.22 as on Oct. 29, 2016, down from 3.47 on Oct. 31, 2015.
Cash conversion cycle (CCC) has decreased to 24 days for the quarter from 58 days for the last year period. Days sales outstanding went up to 64 days for the quarter compared with 51 days for the same period last year.
Days inventory outstanding has decreased to 29 days for the quarter compared with 87 days for the previous year period. At the same time, days payable outstanding went down to 69 days for the quarter from 80 for the same period last year.
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