Shares of Newport Beach-based chipmaker Conexant Systems Inc. rose Monday after the company announced a reverse stock split and said results for the June quarter are expected to come in at the high end of its outlook.
The stock was up nearly 13% in early afternoon New York trading on a recent market value of about $247 million.
Conexant is looking for revenue of $167 to $171 million for the quarter ending June 30.
Including the effect of the reverse stock split, the chipmaker is expecting a loss of $3 million to $8 million.
Analysts had been expecting a loss of $5 million on sales of $169 million.
The company also gave an outlook for the September quarter, when it expects to turn a profit.
It’s looking for profits of about $4 million to $6 million on sales of $115 to $120 million for the three months ended Sept. 28.
Analysts are expecting profits of $4 million on $146 million in revenue.
Last month, the company said it’s 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.
The move is part of a long-term restructuring effort that included cutting some 700 jobs last year at its operations around the world.
Analysts have said for years that Conexant needs to narrow its business focus.
Chief Executive Scott Mercer, who started in April, is continuing to pare down.
He outlined a new vision for what Conexant is set to look like after the restructuring is done.
“The new Conexant will consist of two business units,” Mercer said. “We will be a new company with a dramatically improved cost structure, higher gross margins and lower operating expenses, which is reflected in our expectations for the (September) quarter.”
The two lines of business include imaging and PC media, which makes chips for audio, streaming video and surveillance; and the broadband access unit, which will make chips for DSL Internet lines and networking.
In the same announcement, Conexant said it plans to do a reverse stock split, in which every 10 shares held by investors will be converted to one at the close of trading on June 27.
The split is designed to boost Conexant’s stock price to help meet Nasdaq trading rules.
Conexant spinoff Mindspeed Technologies Inc., another Newport Beach chipmaker, also announced a reverse stock split on Monday.
The company is set to exchange five shares for one at the close of trading on June 30.
Mindspeed’s stock dropped 5% on a recent market value of $93 million.
Reverse stock splits lower the amount of outstanding shares and boost earnings reported on a per-share basis.
