Conexant Expected to Lay Off 400 Workers
Conexant Systems Inc., mired in a communications equipment slump, is expected to announce Monday that it will fire more than 400 employees, its second round of cuts in the last four months.
The latest cuts represent about 6% of Conexant’s 6,900 employees, company sources said Friday. The Newport Beach company slashed more than 1,500 jobs in March and April.
Company officials declined to comment.
Although the full extent of the layoffs was not disclosed, Conexant’s support staff, which includes the financing, accounting and purchasing departments, is expected to absorb deeper cuts than in the previous round, said one source, who would speak only on the condition of anonymity.
In the earlier layoffs, the company’s manufacturing operations bore the brunt. For example, the 400-employee work force at the Newport Beach chip factory was cut in half.
Conexant, which makes chips for networking equipment, mobile phones, cable modems and personal electronics, has been struggling with sluggish communications equipment sales.
The company’s chip fabrication plant in Newport Beach and another manufacturing facility in Newbury Park were closed for the last week, their second weekly closure since April, to cut costs.
Two additional weeklong plant closures are expected to be announced Monday, and the company is expected to update its financial forecast for its fiscal third quarter ended June 30.
In late April, Conexant issued gloomy projections for the three months, saying it expected revenue for its personal networking business to fall 35% to 45%. Revenue from the company’s Internet infrastructure business was expected to be flat, or fall slightly.
Analysts surveyed by First Call/Thomson Financial expect the company to post a loss of 43 cents a share for the quarter.
In the second quarter, the company lost $187.5 million, or 77 cents a share, as sales plunged nearly 50% to $251 million.
The stock has been pummeled as well, losing 84% of its value in the last year. The shares fell 65 cents to $7.35 on Friday in Nasdaq trading.
Conexant acknowledges it is scrutinizing its business operations for ways to improve its focus and save money, including the potential sale of certain business units or other assets.
A Taiwanese made-to-order chip company, United Microelectronics Corp., is rumored to be considering buying Conexant’s Newport Beach semiconductor manufacturing plant. Both companies declined to comment on the rumor, which first appeared in the Taiwanese press in mid-June.
“There’s definitely things they are shopping around to try to sell,” said one analyst who requested anonymity. “They’re taking a hard look at everything.”
The company, which analysts say needs sharper focus, is working to shed some of its less strategic business units. The company says it is seeking buyers for its digital imaging business and its subassembly unit in El Paso, Texas.
Conexant also said Tuesday that it plans to sell its global positioning satellite, or GPS, business to privately held SiRF Technology Corp. in San Jose for an undisclosed amount of SiRF stock. The unit, which has 25 employees, logged about $20 million in annual revenue.
Under the terms of the deal, Conexant will continue to have access to its GPS technology for use in mobile phone products.
