And of course, in 2000,
the dot-com bubble burst, a blow to the networking equipment vendors--such as Nortel and Lucent--to whom Conexant was planning to sell its
What followed then was a decline of Conexant’s revenues
from $2.1 billion in 2000 to $521 million in 2002. While the usual
management response to such a decline is to cut workforce to the bones,
Conexant chose instead a business creation strategy. The company spun
off business lines while retaining partial interests in the divested
companies. Three new independent companies Conexant created were Jazz,
Skyworks and Mindspeed.
The strategy worked. It gave an
opportunity to all three companies--Jazz, Skyworks and Mindspeed--to
focus on their particular market segments, while Conexant was able to
focus on the “digital home” market. The company's revenues increased each
year from 2002 through 2004, but reversed again following fiscal 2006.
company attributed its reduced revenue to an overall drop in average
selling price for products and a drop in demand for Conexant products.
Looking back, Chittipeddi, who didn’t join Conexant until June 2006,
observed that Conexant’s competitors had better architecture and better
products than chips then designed by Conexant.
When the revenue
slid from 2006 to 2011, Conexant’s mounting challenge became the
maturing of its debt. In order to address its debt load, the company
sold off assets, including technology and business lines it had
developed and acquired--such as Conexant’s remainder of its interest
in Jazz and its broadband business.
Then, in April, 2011, Conexant was acquired by investment firms Golden Gate Capital and August Holdings Inc.
after being taken private, continued to see revenues slide, despite its
efforts to eliminate operation costs and streamline businesses.
the overall weakness of the semiconductor market, the company’s
relentless debt dogged Conexant. It needed to break free from the burden--originally born out of the company’s acquisition spree and later
divestitures--once and for all.
Besides losing key customers
like Kodak, Conexant was burdened by “oversized and untenable” real
estate costs, according to the company. Chittipeddi noted that Conexant
is saddled with dead leases--facilities the company no longer uses and
the company has been unable to rent. Of lots totaling 300,000 square
feet, “we only use 25,000 square feet,” he said.
When asked how
the company’s customers are responding to the company’s restructuring
announcement, Chittipeddi said, “Their reactions have been relatively
Further, a $50 million investment by the lender, will
give Conexant “breathing room” to build a sound strategy and strong
balance sheets at a reasonable pace, said the CEO. The company expects to receive court approval for its restructuring plan in less than 85 days.
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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