Communications chip maker Conexant Systems Inc. saw its shares tumble Monday after an analyst downgraded the stock, citing concerns that the company is facing increased competition.
The stock (ticker symbol: CNXT) fell $18.81, or 16%, to $96.81, as more than 13 million shares changed hands, about triple the average recent daily volume.
Analyst Rick Billy of SG Cowen shifted Conexant to a "buy" from a "strong buy," and cut his fiscal 2000 earnings expectations to $1.03 a share from $1.08.
In the report, Billy noted that the Newport Beach company's network access and wireless divisions, which accounted for at least 63% of the company's growth in the last year, are facing serious competition.
The company is "superbly run" and is expected to meet these challenges, "but the risk is undoubtedly heightened," he added.
Conexant's competitors include Altera Corp. (ALTR) in San Jose, QLogic Corp. (QLGC) in Costa Mesa and Integrated Device Technology Inc. (IDTI) in Santa Clara, Calif.
Analysts said the Conexant downgrade wasn't unexpected, given the stock's sharp run-up.
The stock surged to a 52-week high of $132.50 earlier this month, bolstered by news of several key acquisitions and new product announcements.
Even after the slump Monday, the shares are up nearly 46% so far this year.
All 15 analysts who track the stock rate Conexant either a "buy" or a "strong buy," according to First Call/Thomson Financial.
"We try not to focus on the share price day-to-day," said company spokesman Tom Stites. "Instead, we're running the business and staying focused on growth opportunities."