Conexant Says Losses Have a Silver Lining
Conexant Systems Inc. on Thursday joined the growing list of semiconductor makers reporting quarterly results that show an industry largely mired in red ink from plummeting sales.
The Newport Beach chip maker reported a much steeper net loss of $238.8 million, or 95 cents a share, for its fiscal fourth quarter, compared with a $57.1-million loss, or 25 cents a share, a year ago. Sales dropped 64% to $201 million for the quarter ended Sept. 30.
Chip makers from giant Intel Corp. to Conexant rival Broadcom Corp. already have announced greatly reduced profits or big losses from the slumping market.
Conexant’s loss includes $102.2 million in writing off goodwill, the amount paid above market value for acquisitions. Excluding that expense, the company would have lost 54 cents a share, a bit better than the 56-cents-per-share loss expected by analysts surveyed by Thomson Financial/First Call.
Conexant executives were upbeat about the future, pointing out that revenue was $900,000 higher than in the previous three months and the loss was down dramatically from $745 million lost in the third quarter.
Chief Executive Dwight W. Decker said Conexant’s wireless business especially has been improving and that cable and networking modems also are becoming strong products again.
He said orders were getting back to normal as the company reduced its inventories 21% during the final quarter--57% over the past six months. Huge inventory build-ups were a primary reason the chip industry crashed in the past year.
Conexant’s Internet equipment business, however, still suffers from low demand and inventory buildups, he said.
Conexant, which was running through cash quickly earlier this year, has cut its cash consumption to $39 million, down nearly 40% from the previous quarter and down 77% from the $170 million it ran through in its second quarter. It now has nearly $500 million in cash on hand.
Overall, Decker said, “we did better than expected.” The company’s stock gained 74 cents to close at $9.75 on Nasdaq before the news was released. Shares rose to $10.44 in after-hours trading.
In other tech earnings reports for the quarter ended Sept. 30:
* Sun Microsystems Inc., whose servers run Web sites and corporate networks, reported the biggest quarterly loss in its history Thursday amid a sharp sales downturn.
The Palo Alto-based firm said it lost $180 million, or 6 cents a share, in its fiscal first quarter ended Sept. 30, contrasted with a profit of $456 million, or 13 cents, in the period a year earlier. Sales fell 43% to $2.86 billion, the high end of its reduced targets. Excluding certain costs, the per-share loss was narrower than analysts’ forecasts.
* Emulex Corp., a Costa Mesa maker of data-storage networking equipment, lost $40 million, or 49 cents a share, in its fiscal first quarter, contrasted with a profit of $12.9 million, or 17 cents, in the year-earlier quarter. Revenue fell 4.9% to $52.7 million.
* Computer Associates International Inc. said it lost $291 million, or 50 cents a share, in its fiscal second quarter. A year earlier, the Islandia, N.Y.-based software maker reported a profit of $138 million, or 23 cents. Sales fell 53% to $734 million. * Corning Inc., the New York fiber-optics maker reeling from a severe slowdown in the telecommunications industry, reported a loss of $220 million, or 24 cents a share, in the third quarter and warned of continued weakness. A year ago, Corning earned $254 million, or 28 cents a share. Sales fell 21% to $1.5 billion.
* Cypress Semiconductor Corp., the San Jose-based maker of chips used in telecommunications equipment, reported a third-quarter loss of $362.3 million, or $2.92 a share. A year ago, it reported a $62-million profit, or 45 cents a share. Sales fell 49% to $180.3 million.
* EBay Inc., the San Jose-based online auctioneer, said third-quarter profit rose 24% to $18.8 million, or 7 cents a share, beating Wall Street expectations. A year earlier, EBay earned $15.2 million, or 5 cents a share. Sales rose 71.4% to $194.4 million.
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Bloomberg News contributed to this report.
