Jazz Semiconductor Inc. might have pulled the plug on its initial public offering earlier this month, but the deal’s not dead.
The contract chipmaker, an offshoot of Conexant Systems Inc., still could go public as early as next year, according to Dwight Decker, Conexant’s chief executive.
“I’m certainly hopeful it is going public sooner rather than later,” Decker said.
Conexant, based across the parking lot from Jazz in Newport Beach, owns 40% of Jazz’s shares.
Washington, D.C.-based private equity investor Carlyle Group owns 47%.
“I felt it would go public in 2005, and I’m still hopeful of that,” Decker said.
Earlier this month, Decker said Securities and Exchange Commission officials approached Jazz about updating its dusty public offering filing, originally submitted in January 2004.
“I would have been happy just to leave (the registration statement) there, but there are rules,” he said.
Conexant and Carlyle opted not to go public during the slow summer months, according to Decker. So they withdraw the filing and refile later, he said.
“Our strategic plans continue to include an IPO,” Jazz spokeswoman Jessica McNaughton said.
The offering was expected to be one of the larger ones of late for Orange County. Credit Suisse First Boston and Lehman Brothers were the lead underwriters.
Conexant has been waiting for Jazz to go public to help pay down some $700 million in debt.
“We have debt coming in due in May, but we have cash to pay that,” Decker said.
Conexant has another $500 million coming due in 2007.
“That’s what we’re counting on Jazz for,” Decker said.
As originally billed, Jazz’s offering was projected to raise as much as $150 million.
A Jazz offering is a key part of Decker’s long running restructuring of Conexant, in which he’s sold off businesses and done another spinoff, that of Newport Beach-based Mindspeed Technologies Inc. in 2003.
Jazz had about $225 million in sales for 2004, up from $185 million in 2003.
The company runs a former Conexant chip plant that produces semiconductors for Conexant and other companies.
But many of Jazz’s customers, including Conexant, have been struggling since late last year.
“There have been a lot of IPOs just holding there,” Decker said.
Still, things seemed to be getting better for Jazz.
The Philadelphia Semiconductor Index, a benchmark for chip stocks, rose 11% in May. A bevy of stock analysts praised chip shares as a wiser investment for fund managers looking to diversify out of slow growth stocks.
And the outlook for chipmakers, including Conexant and Massachusetts-based Skyworks Solutions Inc., is improving.
Conexant, which has struggled since buying Red Bank, N.J.-based GlobespanVirata Inc. in early 2004, said it expects sales for the June quarter to come in at $190 million, 12% higher than a year ago and beyond what analysts originally expected.
And one analyst said he sees a strong second half of the year for Skyworks, which makes chip for wireless communications.
