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Saturday, Jul 2, 2022

Conexant Slumps on Stock Sale

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Shares of Newport Beach-based chipmaker Conexant Systems Inc. slumped Friday, a day after the company said it raised about $52 million in a recent stock offering.

The company’s shares fell more than 6% in early afternoon New York trading on a recent market value of $267 million.

Investors aren’t keen on stock offerings, which dilute analysts and investors’ favorite number—earnings per share.

In an announcement after the close of trading on Thursday, Conexant said it sold 14 million shares for around $4 each.

After fees and other expenses, the company said it netted $52 million.

The company said its underwriters have the option to purchase an additional 2 million shares in the next 30 days.

Goldman Sachs & Co. and Oppenheimer & Co. Inc. managed the offering, which is expected to close next Wednesday.

The stock sale comes after Conexant earlier this week said it’s selling nearly $250 million worth of bonds and stock to pay off debt due in 2026.

The chipmaker said it sold $175 million worth of bonds paying interest of 11.25% and due in 2015.

The moves are part of a big restructuring effort by Conexant to clean up its balance sheet by raising capital and paying down debt.

In July, Conexant sold $20 million worth of stock. In January, the company applied for standing approval to sell up to $100 million worth of its shares, a prelude to this week’s stock offering.

It’s also sold some patent rights to raise funds.

The company in January struck a deal with Santa Ana-based developer City Ventures LLC to sell 25 acres near its headquarters for $26 million.

City Ventures now is asking for an undisclosed lower price on the land, Conexant said Wednesday. The deal, expected to close this month, now is being delayed, according to the company.

Over the past two years, Chief Executive Scott Mercer has streamlined the company by selling off unprofitable parts of the business and bolstering a handful of growing product lines with strategic acquisitions.

Conexant’s chips go into phones that make calls over the Internet, all-in-one printers, digital picture frames and computer speakers, among other devices.

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