Chip maker Conexant Systems Inc. reported its second consecutive quarterly profit Thursday and said that improving sales of products carrying its chips would boost revenue in the current quarter by about 5%.
Expected strong sales of personal computers and growing worldwide demand for Internet access will boost Conexant’s revenue in its fiscal first quarter ending Dec. 31 to about $170 million to $175 million, said Dwight W. Decker, chief executive of the Newport Beach-based company.
Conexant’s chips are used in cable and dial-up modems, satellite set-top boxes, personal computers, fax machines and video game consoles.
“Broadband is booming now in Asia,” Decker said. Internet subscriptions through telephone lines “are up 40% to 50% worldwide compared with a year ago.”
Conexant should double its operating profit in the current quarter, he said in a conference call with financial analysts. That would mean operating profit of 2 cents a share, a conservative estimate compared with financial analysts’ consensus of 4 cents a share, according to Thomson First Call.
In its just-concluded fiscal fourth quarter, Conexant reported a profit of $37.2 million, or 12 cents a share, compared with a loss of $176 million, or 66 cents a share, a year earlier. Revenue surged 24%, to $165 million.
The company attributed the turnaround mainly to increased shipments of chips providing television and Internet access through cable and satellite.
Conexant shares fell 11 cents, or 1.8%, to close at $6.09 in Nasdaq trading before the results were released. The stock fell 18 cents, or 2.7%, to $5.91 in after-hours trading.
Over the last two years, Conexant has spun off a chip wafer plant and units focusing on global positioning, digital imaging, wireless communications and networking chips to focus on high-speed home networking.
Conexant is banking on a strategy it calls the “broadband digital home,” where consumers increasingly receive television by satellite and get access to the Internet through cable or high-speed telephone lines.
“The digital home is a very high-growth area, with lots of consumer demand,” said F. Drake Johnstone, a technology analyst with the brokerage Davenport & Co. in Richmond, Va., who does not own Conexant shares. “There’s very strong demand in the Far East and Europe, and also in the U.S.”
Demand for satellite set-top boxes, high-speed Internet access and wireless home routers accounts for about half of Conexant’s revenue; chips for dial-up modems in personal computers and fax machines account for the other half.
Results for the fourth quarter represented the second consecutive quarter of profit after six consecutive quarters of losses.
For the full year, Conexant lost $705 million, or $2.56 a share, compared with a deficit of $881 million, or $3.40 a share, in fiscal 2002. Revenue rose 14.9% to $600 million.