Wednesday, October 31, 2007

Conexant Cuts Wireless In Restructuring

Conexant Systems reported quarterly revenues of $183.9 million, including a non-recurring royalty of approximately $4 million related to an existing license agreement. Core gross margins were 44.7 percent of revenues. Core operating expenses were $90.3 million. The core operating loss was $8.0 million, and the core net loss was $18.5 million, or $0.04 per share.

In addition, the company announced that it will terminate further investments in "stand-alone"" products for wireless networking but will continue to support DSL gateway solutions that incorporate wireless-networking capability. Conexant will eliminate approximately 140 positions worldwide. The company said it plans to maintain the staffing levels required to support existing wireless networking customers with current solutions. Conexant's remaining wireless employees will join the company's Broadband Access organization and support DSL gateways that incorporate wireless connectivity.

The company has also discontinued further investments in developing network processor solutions and packet switch products, and terminating its investment in HomePlug networking. In each case, the company will support current customers that are using existing products.

"In the fourth fiscal quarter, we made solid progress across multiple fronts," said Dan Artusi, Conexant president and chief executive officer. "We delivered on the performance expectations we established at the beginning of the quarter, we restructured our business and took action that will significantly reduce expenses, and we narrowed our business and product focus.

"Including the wireless networking actions announced today, we have reduced our worldwide workforce by approximately 20 percent over the past five weeks," Artusi said. "We will continue working to narrow our product-development focus in order to improve our engineering execution and our ability to deliver innovative, cost-effective solutions to customers on schedule. At this point, our most important company priority is to return to breakeven financial performance as quickly as possible."