Conexant, Quiksilver Take Beating After Dim Forecast

Wall Street battered shares of Conexant Systems Inc. and Quiksilver Inc. on Thursday, a day after the Orange County companies issued gloomy financial forecasts.

Conexant’s stock tumbled 31%, or $6.38 a share, to $14 after the Newport Beach chip maker said Wednesday that it expects to lose money in its first fiscal quarter, noting that a steep drop in consumer demand for personal computers, fax machines and satellite TV set-top boxes has caused a sales shortfall.

Analysts had expected the company to post earnings of 11 cents a share for the three months, according to a survey by First Call/Thomson Financial.

Quiksilver’s stock fell 27%, or $5.88 a share, to $16.13 after the Huntington Beach maker of casual wear and surf-style apparel warned investors to brace themselves for a disappointing 2001 because of the weak French franc.

Although it met fourth-quarter estimates, Quiksilver said the weak European currency caused earnings to be roughly 10% lower for the full year than they would have been had the franc remained constant with the U.S. dollar.

Quiksilver derives about 35% of its business revenue from Europe, said Steve Richter, an analyst with Tucker Anthony, who downgraded the stock Thursday to buy, from strong buy.

Jennifer Black of First Security Van Kasper, who also cut her rating to buy from strong buy, added that the company won’t be able to pass along any further price increases in Europe, and will consequently see its European gross margin shrink. She also said the first quarter next year will be affected by additional expenses for its new brands, including more trade-show costs.

However, both analysts agreed that Quiksilver’s core business remains healthy, mainly thanks to the strength of the company’s Roxy brand, both in the domestic and international markets.

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Bloomberg News and Dow Jones Newswires were used in compiling this report.