Conexant spun off in 1999 from Rockwell, which at the time held a dominant
position in the voice and fax/modem chip market. Now Conexant looks as though it’s
going back to its voice heritage. The company is keen on
carving out a niche for its voice processing technology.
Consumer Electronics Show earlier this year, Conexant showed off its
proprietary far-field voice input processor SoC, which works on a voice
trigger, to turn a TV on or off even in a noisy room. The same voice
processing chip can be also used with VoIP applications such as Skype
TV, so that a user can talk to another person on Skype even while the TV
is blasting in high volume. Keys to such solutions are Conexant’s
far-field voice processing algorithms (acoustic echo cancellation, noise
reduction, beam forming as well as pre- and post-processing) and its
high performance 24-bit A-to-D converter.
Beyond voice processing, Conexant will focus on printer SoCs, headsets for gaming machines and video surveillance.
Chittipeddi noted that Conexant today has a solid customer base including Plantronics and Logitech.
also important to note that Conexant is avoiding the already crowded
market for consumer video products and set-tops, where competition is
intense and often dominated by Broadcom. The company’s new commitment is
to well-differentiated niche segments.
With its more focused
portfolio, Conexant is confident of recovery and managing its growth
more reasonably. Free of debt payments, “we can generate cash that we
can use for investing in our business, rather than for paying interest,”
What went wrong
There are a million reasons why and how things went wrong for Conexant. However, betting on the Internet boom and building its business on “networking” wasn’t one of them.
problem for Conexant in the late 1990’s was that the company’s modem
chips were built for the analog era. In order to compensate for this
weakness, the company went whole hog acquiring technologies that looked
useful for building the broadband future of the Internet. Of the nearly $2
billion Conexant spent during its shopping spree, the most
stunning was the acquisition of Maker Communications, a Massachusetts-based
software company whose chips worked with light-based technology. Maker
Communications had all of $13.6 million in annual sales at the time it
sold itself for nearly $1 billion in Conexant stock, according to
As all this happened, Conexant underestimated
the constant need for large capital that had to be fed to the companies
it had acquired. In 1999 and 2000, Conexant ended up issuing two
tranches of debt, totaling $1 billion.
Here's an example of what sort of problems Conexant has, and why it's so difficult to work with them. Great FAE - absolutely fantastic FAE. Great support, wonderful products.
Then comes the reality: Order a dev kit. No inventory. Order samples. No inventory. Order parts. No call back from the Distributor, nuHorizons. Period.
Our FY2013 for the CX93610 is 25,000 units.
Our FY2014 for the CX93610 is ~240,000 units.
And possibly higher.
So after designing their part into our product, we can't get the parts, and we need to go in another direction. Such a bitter pill to swallow.
That is Conexant.
There was huge mismanagement at the CEO level at this company that has left a lot of people lose their jobs. Not a single CEO had the right technical or marketing background to steer the company and so the downward spiral precipitated by financial mismanagement. The current CEO was a "get lucky person" with an operations background who has neither a marketing or technical background to retarget it to new markets. It still has very good engineers who stuck with the company. It needs a good CEO. It has the DNA to execute well on the engineering front.
I always find it odd when companies involved in what should be a thriving business area, end up struggling or failing. But then again, back in the '90s and '00s, wasn't it obvious to everyone that this ever-important "growth" was primarily achieved through acquisitions? How can any sensible person get excited about that kind of growth?
Conexant spun off from my company, and our group was sold off to another company. Many top notch engineers at Conexant. I have to believe the analysis in the article is correct. Too much of this "growth by acquisition," as opposed to growth by creating new market demand, and an underestimation of the cash suction those acquisitions would create.
Lessons one wishes the politicians and government bureaucrats would also take to heart. Staggering and growing debt will ultimately be the undoing of any organization, including a government.
You have to look beyond all the rosy announcements and blames from CNXT management. Thanks to financial arrangements, all the money at Conexant is long gone. CNXT small investors and CNXT employees are the only victims to see their hopes vaporized before their eyes.
Conexant had the best engineers, advanced products, and strong financial lineup.
"Forgive but never fortget their name." John F. Kennedy.
Dwight Decker,Dan Artusi, Scott Mercer, Christian Scherp, Sailesh Chittipeddi and its cronies effectively wiped out everything with their financial expertise.
Chapter 11 is the best solution for Conexant and put it out of misery. CNXT shareholders and its employees (ex and current) are the only victims, gone with their saving, trust, and retirement. RIP.
I'm not so sure the voice processor will be in high demand given today's processors are so powerful. Considering power efficiency, 1 less chip will definitely reduce overall power consumption.
The future of a company is typically relying on the vision of the management team. The vision may turn into gold. Unfortunately, if the team fails, the workers suffer. It is unfortunate that Conexant has to file Chapter 11. I do hope the team successfully revives the company.
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