Out of the Gate, Conexant Stock Up 12%
Conexant Systems Inc., the Newport Beach-based communications semiconductor business recently spun off by Rockwell International Corp., enjoyed a 12% jump in its stock price in its first day of trading on Wall Street.
Amid brisk trading, Conexant’s stock rose $2.06 a share from its when-issued price last week, closing at $18.81 on the Nasdaq market. More than 3.7 million shares were traded.
Rockwell’s stock price, adjusted for the spinoff, rose 94 cents to $41.13 a share in light trading.
“We’ve seen a lot of interest in Conexant, particularly among investors who are looking for a turnaround story or a long-term semiconductor story,” said Daniel Myers, senior semiconductor analyst with Lehman Bros. “We had expected the stock to be weak today due to S&P; 500 Index fund selling. . . . The fact that the stock held up is a very good sign.”
Earlier in the day, Conexant executives reiterated predictions that the company will return to profitability by the close of its fiscal year in September.
Despite recent heavy losses--Conexant reported a loss of $262 million on revenue of $1.2 billion for fiscal 1998--industry watchers say the Orange County firm has a promising future. Analysts expect the company to post losses for the first three quarters of 1999 and a profit of 2 cents per share for the fourth quarter, according to a First Call survey.
Conexant left Rockwell debt-free Dec. 11 with a $350-million bank credit line in place, said Dwight Decker, the company’s CEO and previous president of Rockwell Semiconductor Systems.
About 45% of Conexant’s revenue this year will come from modem chip sales, Decker said. This is a drop from previous years, where as much as 80% of sales came from analog modem chip sets.
Instead, Decker said he sees more than 60% of the company’s revenue drawn from its emerging network and wireless businesses. By 2001, that figure is expected to rise to 75%, company officials said Monday.
In this broader space, Conexant is among the leading contenders. Yet it faces serious competition from such chip developers as Irvine-based Broadcom Corp., Level One Communications Inc. in Sacramento and Vitesse Semiconductor Corp. in Camarillo.
Bloomberg News contributed to this story.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Up and Running
Rockwell spinoff Conexant ended its first day of official trading Monday up $2.06.
Dec. 31 $16.75 *
Monday’s hourly closes
4:30: $18.81
* When-issued price
Source: Bloomberg News
