1,400 Being Added; Decker Takes Playful Poke at Broadcom
Despite the battering it has suffered on Wall Street in the tech-stock slide, Newport Beach-based chipmaker Conexant Systems Inc. remains on a sharp growth curve, according to CEO and chairman Dwight Decker.
“We expect to grow this business to at least a 30% to 35% compounded rate over the next five years,” Decker told a recent gathering of the Orange County Forum, which recognized him as the Orange County Business Journal’s Businessperson of the Year.
Decker said he expects the company’s payroll to likewise increase. Conexant, which started the year with a payroll of more than 7,000, including more than 2,600 in Orange County, has added 700 professionals this year, Decker said. A spokesman said later that Conexant plans to hire another 700 staffers during the rest of this year. Decker said most of the hires are in product development, marketing and sales.
Decker told the gathering that he expected Conexant to finish 2000 with revenue of $2.3 billion,a 15-fold increase from 10 years ago, when Decker took over the operation, then a tiny division of conglomerate Rockwell International. Conexant’s trailing 12-month revenue is $1.84 billion.
More Acquisitions to Come
Conexant also expects to continue its acquisition spree, with plans to add five more companies to the five it picked up in the past six months, Decker said. He said the company intends to continue using its stock to make these acquisitions.
Conexant’s stock was trading last week at the 50 level, down from the 60 level where it began the year and way down from its highest level in the 120s during February.
In his remarks, Decker also alluded, sometimes playfully, to cross-county rival Broadcom Corp. of Irvine. Broadcom is the only OC-based public company with a bigger market cap than Conexant, by a wide margin,$37 billion for Broadcom to $10.5 billion for Conexant, as of last week.
Decker suggested the rivalry between the two companies is sometimes overblown. Conexant has roughly three times the revenue of Broadcom; Decker noted that among a wide range of Conexant product offerings in three growth fields (wireless communication, Internet infrastructure and broadband to the home) the two companies compete head-to-head in only one line at the moment,cable modems, a business that Broadcom thoroughly dominates.
But Decker signaled Conexant’s intent to try to chip away at Broadcom’s market share: “We have a solid business in cable modems right now in markets outside the U.S., as we continue to work for cable modem certification for our cable modems in the U.S.”
Decker added, “We are clearly going to be, by the end of this year, acknowledged as the No. 2 cable modem provider behind Broadcom,and we will keep all of the cable modem market share in Orange County.”
Reshaping Economy
In fact, Decker described both Conexant and Broadcom as forces helping to reshape the local economy:
“We want to play a leadership role in helping to develop this area into the epicenter of next-generation communications technology,” Decker said. “We’ll do it with our companions down the street, Broadcom, that are our competitors as well as collaborators,they will be (collaborators) over time,and we will certainly do it in conjunction with the many companies that will be started by our team and their team and others as they spin off from our companies and build the infrastructure of communications companies here over the next five to 10 years.
Full Speed Ahead
“It’s just beginning ’99 was a great year but the really great part is the next five to 10 years. I think there’s nothing that can stop it except our own abilities to execute.”
Decker also recounted the vicious fight between his then-Rockwell unit and 3Com in the late ’90s for dominance of the PC and fax modem markets.
“In this modem war, Conexant is the last man standing. In fact, we’ve rebuilt our market share to almost 60% now, margins have come back to near-historic levels and we are absolutely very successful and perhaps the only successful player in that business now, and we are growing it,” Decker said.
He said that experience demonstrated one of the aspects of Conexant’s culture: “We’re not afraid of competition and we don’t give up.”
“I have to relay this story to (Broadcom CEO) Henry Nicholas sometime,” said a smiling Decker, who quickly added, “No, I’m just kidding.”
