CIBC World Downgrades Pixelworks

Analyst Daniel Gelbtuch says his lower rating is based on the company's disappointing second-quarter results and outlook

Pixelworks (PXLW ) posted 5 cents second-quarter (GAAP) loss per share, and sees 10 cents to 13 cents third-quarter (GAAP) loss. CIBC World downgraded the stock.

Analyst Daniel Gelbtuch says he is downgrading to sector underperformer from sector perform on the company's disappointing second-quarter results and outlook. He notes, in contrast to strong results from Trident Microsystems (TRID ) and Genesis Microchip (GNSS ), Pixelwork's ATV segment (i.e., DTV) experienced a 3% sequential drop in the second quarter.

Gelbtuck thinks digital TV ramp overall is proceeding on track, and even exceeding estimates. But he notes Pixelworks's sub-par results, bloated operating expenses, deteriorating competitive positioning are all causes for concern. He sees things getting tougher from here.

He cut his 23 cents 2005 EPS estimate to a 2 cents loss, and 55 cents 2006 EPS to 26 cents EPS.

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