S&P; Lowers Ratings on Conexant Systems

Credit agency Standard & Poor’s lowered its ratings on Conexant Systems Inc. and its debts in reaction to the company’s announcement last month that it would defer the planned public offering of its Internet equipment business.

The Newport Beach communications semiconductor manufacturer had been placed on the credit agency’s watch list in September, when plans for the public offering were announced. In lowering the company to B+ from a BB- rating, S&P; said Conexant’s revenue and profitability are “likely to remain depressed” in the near and intermediate future.”

Conexant’s bank loan debt and its mid-term debt securities were lowered, respectively, to B+ from BB- and to B- from BB- ratings. All previous and new ratings mark the debts as low-grade speculative investments, more commonly known as junk bonds. The lowered ratings will make it more expensive for Conexant to borrow money but will not have a major effect on the company, analysts said.

Conexant executives declined to comment.

S&P;, which released its new ratings after the market closed, said it will reassess Conexant if the company proceeds with plans to spin off the Internet infrastructure company. Conexant shares lost $1.44 to close at $16.56 a share on Nasdaq.