Word of Break-Even Quarter Pushes Conexant Shares to High
Conexant Systems Inc. shares hit an all-time high Monday, after the money-losing, Newport Beach-based chip maker said it will nearly break even in the second fiscal quarter and return to profitability earlier than expected.
Conexant’ stock jumped 18%, or $3.31 a share, to $22 amid heavy trading on the Nasdaq market. Nearly 5.9 million shares were traded, more than triple the daily average for the last three months.
Earlier in the session, the stock hit $23.19, its highest level since the company made its market debut Jan. 4 after being spun off by Rockwell International Corp.
Analysts attributed the bullish report to overall growth in the semiconductor industry, as well as a boom in Conexant’s networking and wireless divisions.
The company was expected to lose 7 cents a share in the second quarter and 3 cents a share in the third quarter, according to analysts surveyed by First Call.
Company officials also note that the telephone modem business, though troubled, is picking up slightly.
“In all of our new areas, we’ve been growing more quickly than expected,” said Dwight Decker, Conexant’s chief executive. “We’ve been adding [manufacturing] capacity to our [facility] in Newberry Park to keep up with the demand.”
Previously, the company reported a net loss of $57.1 million for the first quarter and said it expected to return to profitability by the end of the fiscal year in September.
By broadening its product line, Conexant has been trying to use a diverse product approach to leave behind its troubled financial past. The company unveiled the industry’s first programmable cable modem chip earlier this month, which manufacturers said will cut the cost of building modems by 25% and give them an easier way to upgrade their devices.
Other Conexant products include chips for the growing digital cable set-top box market, as well as chips that blend modem functions with home networking abilities.
The company also is considering such broad-band features as Internet telephony, and building a wireless phone base into a cable modem.
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Conexant Climbs
Conexant Systems’ stock leaped 18% on unusually heavy volume Monday after the company said it expects to break even in the fiscal second quarter ending March 31. Closing prices and volume in thousands:
Price
Monday: $22.00
Volume
Monday: 5,879
Source: Bloomberg News
