Below is an article about CNXT.
But first....
Why do you bother responding to someone who's only position is "the market is going to crash"? This weekend's conversation on this thread was a total waste of bandwidth and until such time as Mr Taylor gets a freakin clue, any attempt to have a discussion with this person is completely futile.
We've all tried to discuss the company logically with this person but this is someone who admits he: doesn't follow the sector, doesn't understand the industry, doesn't take any time to investigate details, doesn't want to do any work yet he expects others will listen to the crap and drivel he posts.
He says he's here only to watch people lose money, in other words, he's only here to try and inflict pain on someone gullable enough to let Mr Taylor get under their skin. Some phantom person(s) out there who David believes is losing money with their CNXT investment and is so freakin stupid that they will sell off their CNXT holdings simply because they saw the light that Mr. Taylor shown on the scam company called CNXT.
We have some wonderful people in this world and Mr Taylor ranks right up there in my book.
Conexant's split serves two purposes:
stock value and market focus
By Darrell Dunn
Electronic Buyers' News
(09/15/00, 05:42:41 PM EST)
Conexant Systems Inc.'s sudden move this week to split into two
semiconductor companies is expected to provide new momentum for
its languishing stock, while allowing it to more readily focus resources
on specific end-equipment markets.
The Conexant board of directors' decision came after the company
had seen its market valuation plummet over the past six months,
leaving it in peril of not being able to fund growth and fuel major
acquisitions in the highly competitive communications market,
analysts said.
Conexant's stock price fell from a high of $132.50 in March to as low
as $26.50 last month, while the stocks of chief rivals such as
Broadcom Corp., PMC Sierra Inc., and Vitesse Semiconductor Corp.
have fared much better. Following the announcement last Wednesday
that it will be splitting into two companies, Conexant's stock rose to
$54.40 on Thursday.
“The market has not treated Conexant fairly when you look at its
peers, its profits, the breadth of its product line,” said analyst Will
Strauss of Forward Concepts Co., Tempe, Ariz. “Its stock was going
nowhere, and there was clearly a lot of pressure from concerned
parties.”
Conexant, based in Newport Beach, Calif., plans to split its current
product portfolio to create an Internet infrastructure company and a
personal networking company. The Internet infrastructure company
will be spun off, with an initial public offering scheduled for January.
Although Conexant executives would not confirm it, it appears the
personal networking company will retain the Conexant name, while a
new name will be selected for the Internet infrastructure operation.
Conexant executives also declined to speculate on who will be named
to lead the two companies, although chairman and chief executive
Dwight W. Decker said Conexant intends to name in-house managers
to most of the executive positions.
“We believe that creating two separate companies will unleash both to
realize their full growth potential,” Decker said.
“The internet infrastructure and personal networking markets are each
characterized by largely separate groups of both customers and
competitors, each exhibiting significantly different product, sales
channel, and customer-support requirements,” he said.
“The split will enhance the competitiveness of both companies by
allowing them to focus their research and development activity, while
also allowing them to attract and retain the highest-caliber technical
talent,” Decker added.
The creation of two entities represents the culmination of a
five-year-old effort to diversify Conexant's business in adjacent
communications markets having specific needs for mixed-signal and
digital signal processing technologies, he said. Conexant was formed
in January 1999, when Rockwell International Corp. spun off Rockwell
Semiconductor Systems, long a leader in dial-up modem ICs.
The planned Internet infrastructure spinoff has been strengthened by
six recent acquisitions targeting high-growth market segments, and
analysts believe the unit may be able to grow even stronger when
removed from the shadow of its larger sibling.
“Internet infrastructure represents Conexant's fastest-growing
business,” said Arun Veerappan, an analyst at Robertson Stephens
Inc., San Francisco. “The spinoff of the business will likely unlock
significant value from Conexant's stock.”
Ashok Kumar, an analyst at U.S. Bancorp Piper Jaffray Inc., in Menlo
Park, Calif., said the proposed Internet infrastructure company
represents Conexant's “crown jewels.” The spinoff could easily and
quickly achieve a market capitalization equivalent to the entire
company today, while the personal networking company is likely to
achieve only book value, according to Kumar.
But given this likely outcome, he added, the change could cause a
problem once Conexant determines which employees will be
assigned to which company. “How are they going to draw a line in the
sand?” Kumar asked. “Who will want to be left behind? And given the
competitive nature of Broadcom just down the road [Broadcom is
located in Irvine, Calif.], it could be a difficult situation.”
The Internet infrastructure company, which is expected to achieve
revenue of $550 million in its current fiscal year ending Sept. 29, and
has projected revenue of around $1 billion for calendar year 2001, will
provide semiconductors and software ranging from physical-layer
access devices to switch fabric, as well as network-processor
products for high-speed optical cores, according to Decker.
Although the businesses within the Internet infrastructure company
currently represent only 30% of Conexant's total revenue, they are
responsible for 60% of its earnings per share, said Rick Billy, an
analyst at SG Cowen Securities Corp., New York.
“If you can create a smaller company with high growth, then the
valuation tends to be higher,” Billy said.
The Internet infrastructure operation will be grouped into three product
areas: wide-area network transport, multiservice access, and
broadband access.
The WAN-transport group will focus on products for packet-based
optical networks, including physical-layer transceivers, ATM devices,
and network processors. The multiservice-access group will offer
carrier IP-gateway products incorporating voice-over-Internet-protocol
capability. The broadband-access group will address symmetrical and
asymmetrical DSL products.
Conexant in the past year has been sharply focused on the
businesses within what will become the Internet infrastructure
company. This has included the acquisitions of Applied Telecom,
HotRail, Microcosm, Oak Communications, and Conexant's largest
acquisition to date, the $1 billion purchase of Maker Communications.
Two other acquisitions, of NetPLain and Novanet, are in the process
of being completed.
“It's been amazing to watch as companies like Conexant expand and
contract,” Forward Concepts' Strauss said. “They gobble, gobble,
gobble, and then spin off, spin off, spin off.”Plans call for the Internet
infrastructure company to be fabless. Foundries currently account for
about 70% of its products.
The personal networking enterprise will retain all of Conexant's
manufacturing and test capacity, and will provide the Internet
infrastructure company with foundry services through a planned
multiyear alliance.
The personal networking company is expected to hit revenue of about
$1.5 billion in the current fiscal year, and about $2 billion in calendar
year 2000, Decker said.
The company, which is at the heart of Conexant's traditional business
and customer base, will focus on delivering products for the
mobile-communications and broadband-digital markets, including
cable and DSL modems, home networking, and digital-cable and
satellite set-top-box solutions. Home and small-office applications will
include digital-imaging and video devices and data and fax modems.
Another area of potential growth for the personal networking company
is CDMA, GSM, and TDMA devices for digital-cellular handsets,
including power amps, RF subsystems, and complete handset
chipsets.
Alvin Kressler, an analyst at Kaufman Bros. L.P., New York, said
Conexant's the decision to split may require its customers to begin
with two different companies if their product lines overlap, although the
adjustment would likely not be difficult.
“They were dealing with separate touch points anyway, so I don't think
this changes a whole lot,” Kressler said. “This will allow Conexant to
focus its efforts more cleanly. There will be fewer battles for capital
and investment for individual businesses.
“One of the biggest criticisms [of Conexant] was that it was too broad
in communications,” Kressler said. “If you were an OEM and placed
an order, you might ask how important you were to the overall
scheme. For customers like Cisco, Lucent, and Nortel, they are
always important, but some of the medium-size customers may have
wondered.”
Joe Osha, an analyst at Merrill Lynch & Co. Inc., New York, said the
move should soothe “employee unhappiness with low stock prices, ...
which is an important consideration given the hot market for
communications-oriented engineering talent.”
But despite the strong consensus among analysts that the split
augurs well for Conexant, the company appears not to be out of the
woods yet. Among other things, it must marshal the proceeds of the
planned IPO in January to reduce any competitive advantage rivals
have built up in the recent period. |
