NEWPORT BEACH, Calif.-- Conexant Systems Inc. today said sales are showing further improvements in the last three months of 2001, with company revenues expected to grow 10% sequentially from $201 million in the prior fiscal quarter. Conexant had been forecasting a 5-to-7% sequential increase in sales in the fiscal first quarter, which ends Dec. 28.
The Newport Beach communications chip company updated its revenue estimates while announcing a new plan to spin-off its wireless IC business and merge it with Alpha Industries Inc. The merger will create a third independently-traded chip company from Conexant operations when it is completed in the second quarter of 2002, according to officials today (see story).
"This increase in revenue expectations primarily reflects the impact of sustained strong demand throughout the quarter for our wireless product portfolio, including power amplifiers, radio-frequency subsystems, and complete GSM system solutions," said Dwight W. Decker, chairman and chief executive officer of Conexant. "In addition, total Conexant backlog visibility continues to improve steadily, increasing our confidence for sequential revenue growth in the March quarter."
Conexant said its wireless business is now expected to grow 35% sequentially from the prior fiscal quarter compared to a previous estimate of 25%. The company said revenues from its broadband access business are also somewhat stronger than anticipated, with sequential growth now expected in the 3-to-5% range. A sequential decline for the company's Internet infrastructure business--called Mindspeed Technologies Inc.--remains in line with original expectations, according to Conexant.
With the spin-off of its wireless business into a new company, Conexant said it plans to "significantly strengthen its balance sheet by the middle of next year." The merger agreement with Alpha Industries calls for the new company to acquire Conexant's chip assembly, testing, and module manufacturing plant in Mexico for $150 million in cash. This transaction is expected to be completed in the second quarter of 2002, along with the merger of wireless businesses into a new company, which will be named in a few months.
In addition, Conexant said a deposit of $150 million in cash with a key foundry partner will be refunded in the next six months. Conexant did not identify that foundry supplier.
Conexant has accelerated its move to outside silicon foundries, while cutting back its employment with a series of layoffs in the semiconductor downturn. The company cut 450 jobs and restructured its manufacturing units in the summer (see July 9 story) after announcing the layoff of 1,500 workers in the spring (see March 26 story).
"Building on the success we have demonstrated over the past two quarters in our cost-reduction and cash-management activities, these two steps will add a further $300 million in cash to our balance sheet by the middle of next year," Decker said.