Newport Beach chipmaker Conexant Systems Inc. is selling 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.
Conexant is set get $110 million in cash now and up to $35 million in the next two years if the business reaches milestones. NXP plans to combine the business with its own operation making set-top box chips.
The sale is set to close in the next two months. About 700 Conexant workers in the U.S., Europe, Asia and Israel are set to join NXP.
The move is part of a restructuring at Conexant, which analysts say has too many product lines and needs to slim down.
Conexant’s shares closed up 11% Tuesday with a market value of about $250 million.
“Divesting our broadband media processing product lines represents a major step in our continuing effort to restructure our company’s business model and cost structure,” Chief Executive Scott Mercer said. “As we get closer to completing the transaction, we plan to provide additional information on the financial performance we expect from our continuing company.”
Mercer took over as Conexant’s chief executive in April. He replaced Dan Artusi, who was hired in 2007 and is said to have been ousted by the board over the pace and scope of restructuring.
Conexant also reported results for the quarter through March on Tuesday.
Sales fell 13% from a year earlier to $174 million but beat Wall Street’s expectation of $168 million.
The company had an operating loss of $125 million, slightly better than analysts had expected.
Conexant said it sees sales of $167 million to $171 million for the current quarter, in line with expectations.
