Conexant Founder Returns as CEO
Communications chip maker Conexant Systems Inc. moved Tuesday to undo some of the damage from its roughly $1.2-billion acquisition of GlobespanVirata Inc., reappointing founder Dwight Decker as chief executive and moving the firm’s headquarters back to Newport Beach from Red Bank, N.J.
Conexant has racked up more than $439 million in losses since the deal closed in late February. Those losses have been “unexpected and unacceptable,” said Decker, who had been serving as chairman of the combined company.
Decker blamed the losses on a decline in the market for DSL equipment for high-speed Internet access -- especially in Japan and China -- and on internal mismanagement that led to delays in new products that cost market share.
He did not specifically criticize outgoing CEO Armando Geday, who had been CEO of GlobespanVirata. Geday resigned Tuesday for personal reasons, the company said.
“Conexant has underperformed this whole year compared to what we expected, and we all agreed that this was the best thing to do,” Decker said in an interview.
Slumping demand and product delays will slash Conexant’s revenue in the quarter that ends in December to about $180 million, down from $297 million a year earlier, Decker said.
Conexant’s shares have lost 78% of their value since the company completed its purchase of GlobespanVirata. They rose 1 cent to $1.62 in regular Nasdaq trading Tuesday and moved only slightly in extended trading after the executive changes were announced.
Arnab Chanda, a semiconductor analyst with Lehman Bros. in Los Angeles, said Decker’s return boded well for Conexant’s future.
“The old Conexant management team is back ... and I think that’s a positive,” he said.
Geday was not available to comment.
Decker said he planned to cut some of the company’s 2,350 jobs in an effort to trim its operating costs by $15 million, or 16%, during the fiscal year that ends in September. Some research and development carried out in Europe and North America will be transferred to Conexant facilities in India and China. The company has shed about 500 jobs since the GlobespanVirata deal was announced a year ago.
Conexant designs and builds chips for a variety of modems, for satellite TV set-top boxes and for game consoles. Its chips also control wireless local-area networks.
Chanda said Conexant was suffering in part as a result of a global downturn in chip demand that was largely beyond its control. “Very few companies are not experiencing the same phenomenon,” he said.
