It’s been awhile, but Newport Beach-based Conexant Systems Inc. hasn’t forgotten how to buy companies.
The chipmaker recently completed its acquisition of Fremont-based Paxonet Communications Inc. in a deal worth $15 million.
Paxonet, founded in 1996 as CoreEl Microsystems Inc., provides semiconductor design services. The majority of its operations are in India. The company has 105 workers, 100 of which are at design centers in Pune and Bangalore, India.
Conexant has been one of Paxonet’s customers.
“Paxonet’s dedicated and experienced team has delivered production-worthy, complex semiconductor designs on schedule to major customers throughout the world,” said Dwight Decker, Conexant’s chief executive, in a statement.
The acquisition was Conexant’s first in some three years and is seemingly unusual for a company that has spent the past few years getting rid of businesses to cut costs.
But the Paxonet buy likely will help Conexant cut costs incurred in the process of designing its chips.
“We plan to leverage Paxonet’s expertise across each of our business units as we work to accelerate new product introductions,” Decker said. “This acquisition expands Conexant’s research and development assets in India by 50%, in line with our previously communicated strategy of reducing operating expenses by shifting product development resources to lower-cost regions.”
Conexant designs chips for modems, satellite TV boxes, game consoles and wireless networks.
The move is the company’s first big one since Decker returned as chief executive late last year.
He had been chairman and came back to daily operations at Conexant after ousting Armando Geday, who had become chief executive after Conexant bought Bank, N.J.-based GlobespanVirata Inc., a maker of chips for high-speed digital subscriber line modems.
The company floundered for a few quarters under Geday, which prompted Conexant’s board to turn to Decker again.
Since then, Decker has been in cost-cutting mode, which includes deals like the Paxonet buy. Decker had said he would farm out more work to design centers in India and China.
Decker also has detailed plans to cut some of Conexant’s 2,350 jobs in an effort to trim its operating yearly costs by $15 million, or 16%. In November, Decker replaced the company’s senior management ranks with a crew of old Conexant executives.
Broadcom Nod
Irvine’s Broadcom Corp. got a nod from brokerage Credit Suisse First Boston, which chose the chipmaker among its top picks for large capitalization stocks in 2005.
Taking a look at Broadcom’s price history, it’s easy to see why. The company’s shares are 5% off where they started 2004 and 30% off the June highs for the year. Of course, there are plenty of catalysts for the stock looking forward. The biggest of which is the arrival of Scott McGregor this month as the new chief executive.
MSC Inks Deere Deal
Deere & Co., the farm gear maker better known as John Deere, has upped its licensing of software from Santa Ana-based MSC.Software Corp.
MSC makes industrial design software that helps manufacturers produce their products. Automakers, aerospace companies and others use MSC software to test how their products work in the real world.
Deere increased its licensing via MSC’s MasterKey Licensing System, which allows customers to access the company’s portfolio of simulation tools with a single license.
“We have designed the MSC.MasterKey Licensing System to give our strategic customers like John Deere the ability to quickly and easily utilize our entire software product portfolio and add tokens as usage demands,” said Frank Perna, chief executive of MSC.
MSC is the subject of a takeover bid by ValueAct Partners LP, a San Francisco hedge fund that in September offered $275 million to take the company private.
The software maker recently inked a deal that puts off the bid while the company finishes a financial review related to options and sales at an Asian unit.
ValueAct owns more than 11% of MSC’s shares, making it the company’s largest investor. MSC started an internal audit of its financial statements in March after shareholders complained that an executive’s severance package wasn’t disclosed.
CombiMatrix Joins Alliance
Newport Beach-based Acacia Research Corp. said Dr. Amit Kumar, chief executive and president of its subsidiary CombiMatrix, would join the board of the NanoBusiness Alliance.
The NanoBusiness Alliance is the industry group supporting nanotechnology, which refers to the production of microscopic devices.
CombiMatrix develops technology for making customizable tests for drug companies and research labs to analyze genetic data.
“I am honored to have an opportunity to contribute to the key organization that is playing a critical role in the development of nanotechnology,” Kumar said. “In the coming years, nanotechnology will pervade everything we do in our work and home. We anticipate revolutionary changes in medicine, electronics, communications, manufacturing and other fields.”
Kumar received his doctorate from the California Institute of Technology in 1991. He completed a post-doctoral fellowship at Harvard University in 1993.
“As nanotechnology becomes more prevalent in our daily lives, we hope to continue our efforts in influencing education, policy and funding issues,” said Sean Murdock, executive director of the Chicago-based NanoBusiness Alliance.
Clarification
We got some feedback from Gateway Inc. on our businessperson of 2004 story about Wayne Inouye, chief executive of the Irvine computer maker. The company wanted to note it still sells TVs and other consumer electronics, though selling computers is more of a focus. Gateway sells directly via its Web site, telephone and a direct sales force. Also, we were off on the geography of where Inouye grew up. The farming town of Yuba City is in Northern California.
