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Technology Stocks : John, Mike & Tom's Wild World of Stocks
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To: John Pitera who wrote (1313)6/13/2000 5:50:00 PM
From: wlheatmoon  Read Replies (1) of 2850
 
Story Stocks
15:11 ET ******
Conexant Systems (CNXT) 39 1/2 -4 1/2: CNXT shares have rebounded only slightly from this morning's low of
37 7/8, but still trade 10% lower than yesterday's close after
rumors hit the stock pre-market. Word on the trading floors was that Chase H&Q was making negative comments
and questioning the company's ability to make their numbers this quarter. Now we haven't received an official note
out of Chase H&Q, but the stock opened three points lower, and that call is widely credited for today's drop. In
response,
CSFB analyst, Charlie Glavin, has issued a note stating that he spoke with Conexant's CFO, Bala Iyer, and the
recent concerns over the health of the company's modem
business in the PC division are unfounded and he remains comfortable with the consensus $0.22 EPS estimate. We
are inclined to trust Glavin on Conexant. Last quarter, SG Cowen downgraded Conexant on a valuation call and
the stock took a
disproportionate beating during the NASDAQ correction. It was Glavin that came to the defense of the stock and
correctly predicted upside to both top and bottom line estimates for the quarter. The concerns surrounding the
quarter stem from slower PC sales -- CNXT derives approximately 36% of their revenues from analog modems.
Sales in that particular business segment are apparently not tracking as anticipated according to Analyst, Jeff Lipton
of Chase H&Q. Lipton also cites the recent decision by the Korean Ministry of Information and Communication to
ban the country's five carriers from subsidizing handsets to attract new customers as making wireless revenues a
very big risk at Conexant. We will stand by Glavin's view as we have not seen any signs that mobile wireless
subscriber growth is slowing and CNXT (which makes power amps for CDMA applications) is uniquely
positioned to benefit from the deployment of third
generation (3G) mobile wireless networks based on CDMA. As the largest pure-play communications chip
company, the company is very closely scrutinized, and we believe
the recent short-term panic has created a buying opportunity for long-term investors. Without refuting Lipton's call
regarding slower PC Division sales in the current quarter,
we see Conexant as a good long-term play in the wireless communications space and cite their dominant market
position in analog modems and technological leadership in CDMA chips as rationale. - Matt Gould, Briefing.com
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