Shares of Newport Beach-based chipmaker Conexant Systems Inc. soared Wednesday after the company said it’s set to sell the rest of its broadband chip product line to Fremont-based Ikanos Communications Inc. for $54 million.
Investors sent shares up more than 12% at close of trading on a recent market value of about $70 million.
The cash deal is expected to close by the end of the June quarter.
Some 400 workers in the U.S. India and China are set to join Ikanos.
The deal is part of Conexant Chief Executive Scott Mercer’s ongoing efforts to slough off slow-growing or unprofitable business units and buy product lines that will generate a steady stream of revenue.
“The divestiture of our broadband access business represents another major step in our efforts to restructure our operations,” Mercer said. “When the transaction is completed this summer, the continuing Conexant will be focused exclusively on providing solutions for imaging, audio, video, and various embedded-modem applications.”
Mercer said the money from the sale will be used to expand product lines and pay down debt.
The sale appears to be the last of Conexant’s broadband chip assets.
About a year ago, the company sold off its business making chips for set-top TV boxes for up to $145 million to NXP Semiconductors, the former chip arm of Royal Philips Electronics NV.
Some 700 Conexant workers have since been integrated into NXP.
The company said last year it’s set to focus on a two lines of business: the imaging and media business and a broadband chip division.
Now that the company has exited the broadband business, Conexant makes chips for a handful of different products:
The company’s imaging group makes chips that go into multifunction inkjet and laser printers, photo printers, digital photo frames and fax machines.
* Its audio group makes chips for computer sound systems, laptop docking stations, intercoms and voice-over Internet protocol speakers.
* The video group makes chips for video surveillance and security cameras.
* The company’s modem chips go into computers, set-top boxes, cash register computers, and security systems, among other applications.
In January, Conexant wrapped up a cost-cutting plan that is expected to save about $12 million per year starting in the June quarter.
The company is set to report results for the March quarter on April 30.
