Looks like Conexant Systems Inc. might have turned another corner.
After a year and a half of upheaval and turmoil at the Newport Beach-based chipmaker, losses have narrowed, sales have increased and the company is talking profit by the end of the year.
At the same time, Mindspeed Technologies Inc., Conexant’s old networking chip business just across the street in Newport Beach, also seems to be improving.
“Third quarter performance increases our confidence in completing the second phase of our recovery plan by steadily growing revenues, improving gross margins and concluding our cost-reduction efforts,” Chief Executive Dwight Decker said in a statement.
Conexant posted sales of $198 million in its quarter ended July 1. That’s down 26% from a year earlier but up 16% from the prior quarter. The chipmaker’s loss, meanwhile, was $32 million, down from a loss of $71 million a year earlier and $73 million in the prior quarter.
Decker expects the company to be profitable by the end of 2005.
Mindspeed also showed improvement in its most recent quarter, posting a loss of $9.5 million, better than a loss of $20.1 million a year earlier. Revenue in the quarter ended June 30 was $27.7 million, down from $35.4 million a year earlier. The company’s sales were slightly better than its March quarter results.
“During the past quarter we experienced a significant pick-up in orders across the majority of our product families and across all geographic regions, and we believe that market conditions are beginning to improve,” said Raouf Halim, Mindspeed’s chief executive.
Conexant has spun off four businesses in the past several years: Jazz Semiconductor Inc., which has been planning to go public for more than a year; its digital imaging unit, now part of Fremont-based ESS Technology Inc.; its wireless chip unit, which now is part of Woburn, Mass.-based Skyworks Solutions Inc.; and Mindspeed.
Conexant itself combined with Red Bank, N.J.-based GlobespanVirata Inc. in early 2004 and shifted its headquarters to New Jersey for a time.
The company moved back to Newport Beach late last year after Decker reassumed the chief executive position in a bid to turn around the company.
Decker had orchestrated the GlobespanVirata buy. He kept the chairman title but gave up the chief executive slot to former Globespan chief Armando Geday.
Geday had worked for Decker when Conexant was part of Rockwell International. The company floundered under Geday, hampered by a market downturn and integration woes.
One of Decker’s first moves back at the company was to shift Conexant’s headquarters back to Newport Beach.
Contemplating Change
It looks like Epicor Software Corp.’s steady executive ranks will get a good shaking two year’s down the road.
Irvine-based Epicor recently said its Chairman and Chief Executive George Klaus plans to remain with the company through 2007. Klaus has led the business software maker since 1996.
Next in line to take over the company could be Mark Duffell, who was promoted to president and chief operating officer. Duffell has been with Epicor since 1996, most recently as executive vice president, worldwide operations.
Another Epicor executive getting promotioned was Michael Piraino. Piraino was named executive vice president and chief financial officer. He formerly was senior vice president and chief financial officer.
Meanwhile, John Hiraoka was promoted to senior vice president and chief marketing officer. Hiraoka most recently was senior vice president, worldwide marketing and business development.
Klaus was Orange County’s highest-paid executive two years ago when he pulled in $39.7 million in cash and stock.
It might say something about Klaus’s worth to Epicor that the company felt compelled to notify investors a good two years before he plans to leave. Under Klaus, Epicor has taken off in the past few years.
The company’s shares are up 30% in the past year.
Epicor posted net income of $12.8 million in the second quarter, up from $8 million a year ago and slightly higher than Wall Street forecasts.
Sales jumped 46% to $71 million in the period.
Epicor’s software culls data from production, distribution and accounting operations for use in sales, marketing and customer support. The company sells software to small and midsize businesses.
Linksys Swells
Irvine-based Linksys Group is getting bigger.
Linksys’ parent Cisco Systems Inc. said it plans to buy Denmark’s Kiss Technology in a stock and cash deal valued at $61 million. Cisco said it plans to fold Kiss into Linksys.
Kiss makes technology that allows TVs and DVD players to hook up to the Internet. The company has 65 employees.
“As more and more entertainment content is delivered over the Internet and as consumers demand access to digital entertainment inside and outside of their home networks, networked entertainment devices will become an integral part of Consumer Electronics,” said Charles Giancarlo, Cisco chief development officer and president of its Cisco-Linksys unit.
Linksys makes home networking products.
This is the third company Cisco has folded into Linksys. In April, Cisco bought privately held Sipura Technology Inc., a voice-over-IP company and folded it into Linksys. The Kiss acquisition is expected to close in October.
