Conexant: Focusing on What's Important
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Semiconductor companies are booming like never before (although the stock prices are not -- as is the case with all other high-tech companies currently). Annual chip sales were a hefty $160 billion in 1999 and are expected to rocket to $600 billion over the next three years.
One of the leaders is Conexant (CNXT). It's hard to believe that this company was once a sleepy modem manufacturer, part of the Rockwell empire. Now, Conexant is targeting the fastest growing segments of the worldwide communications marketplace. In fact, the company is already the world's largest independent company focused exclusively on providing semiconductor solutions for communications electronics.
As for last year, revenues reached $1.4 billion, which was up 20 percent from a year ago. Yes, the company is also profitable. Net earnings rose to $12.9 million.
In just three years ago, Conexant has diversified into: network access, wireless communications, digital infotainment, and personal imaging. Like Cisco, Conexant has built its properties via savvy acquisitions.
But the most enticing part of the company is the Network Access Division. This segment focuses on supplying high-speed integrated circuits for optical communications. Maker Communications was their most recent addition. This company is the leading provider of programmable, high-performance network processors, software solutions and development tools. Maker has the broadest portfolio of physical-layer communications products, including asynchronous transfer mode (ATM), T1/E1 and T3/E3 carriers, optical networking (SONET/SDH), digital subscriber line (DSL) and multi-service voice and data access concentration.
When NASDAQ was more stable, Conexant stock price had hit a high of $132. At these high valuations, the company was able to purchase a variety of strong companies. Now, the stock is hovering at $54-7/16. Although, the market capitalization is $11 billion, which is still enough to continue the acquisitions strategy, especially with valuations of other companies being much lower. If anything, the recent fall could be good news for leading companies such as Conexant.
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