Officials weigh Conexant loss

Mathis Winkler

NEWPORT BEACH -- Chip maker Conexant Systems Inc. announced Monday

that it will lay off about 450 employees worldwide.

A majority of the cuts -- about 325 people -- will occur at the

company’s Newport Beach headquarters and production facility, leaving

Conexant with about 2,000 employees in the city.

“Taking actions that affect Conexant’s talented and dedicated work

force are extremely difficult,” Dwight W. Decker, the company’s chairman

and chief executive said in a prepared statement. “But these measures are

absolutely necessary in order to position Conexant for a return to

profitability.”

The layoffs are the company’s second this year. In March, Conexant

fired 1,500 worldwide, including 450 in Newport Beach.

Another 650 employees in Newport Beach were temporarily laid off

during production shutdowns for two weeks in April. Conexant repeated the

plant closures last week and plans another shutdown from Sept. 3 to Sept.

10.

While calling the layoffs unfortunate, Richard Luehrs, the president

and chief executive of the Newport Harbor Area Chamber of Commerce, said

the city’s businesses would probably not be too hard hit by Conexant’s

latest cuts.

But “there’s a general concern about the economy for Newport Beach,”

Luehrs said, adding that sales were down in general.

Assistant City Manager Sharon Wood also said she was concerned about

long-term effects the company’s ailing health might have on the city.

“I think time will tell what kind of impact it has on us,” Wood said,

adding that the city would probably end up receiving less sales tax from

Conexant.

“They’re buying fewer things if they’re producing less,” she said.

Wood added that fewer employees buying lunch and shopping in the city

might also affect some businesses.

But again, long-term effects could be far more significant, she said.

Conexant officials might decide to leave their headquarters and

factory in the city’s airport area “and then we have a vacant facility on

our hands,” Wood said.

Gwen Carlson, a Conexant spokeswoman, said leaving town was not an

option under consideration.

“We’re here in Newport Beach and have no plans to leave,” she said.

Plans for a 566,000-square-foot expansion project in the city have

been delayed indefinitely. Conexant officials have said they would not

revive the plans until the company’s financial situation improves. As a

result of Greenlight, the city’s new slow-growth law, voters would also

have to approve the project.

City Council members will take a final vote on another expansion

project that’s located near Conexant at their meeting tonight. If

approved, the 250,000-square-foot Koll Center proposal also faces a

Greenlight vote. Community activists, who led the initiative to victory

in November, have already said they’ll campaign against the expansion

because it would create traffic problems.

Conexant’s stock has dwindled from more than $120 per share in early

2000 to around $8 on Monday. Prices rose by about 12%, or 90 cents, after

the layoffs were announced.