Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



What a Difference a Year Makes for Conexant

What's another year?

For communications chip designer Conexant (Nasdaq: CNXT  ) , a year can feel like decades, centuries ... eons. The company just closed the books on its 2007 fiscal year, and I'm almost afraid to look at the numbers for fear of catching something deadly. Nearly every line of these statements is moving in the wrong direction.

Sales dropped 16.7% year over year. The net loss tripled; every margin that matters worsened; and just to kick sand in the face of investors, the one thing that did grow on the income statement was the share count. Ach du lieber!

But then my roving eye wandered down to the balance sheet, and what little cash flow information we were handed; that's where the good news started. There's less cash and short-term investments in the coffers now, but it was used to pay down debt. There was also a lot less red in the owner earnings column, which is the closest thing to a free cash flow reading we have today.

Those are just numbers, though. More importantly, there's fresh management taking the business in a new, more focused direction. New CEO Dan Artusi handed out pink slips to 20% of the Conexant workforce over the past five weeks, reduced new development on all stand-alone wireless products, and refocused on what the company knows best: DSL and cable modem networking, with a side of media decoding for set-top boxes.

So Conexant is leaving the Wi-Fi market to rivals who can turn a profit on it, like Atheros (Nasdaq: ATHR  ) , Broadcom (Nasdaq: BRCM  ) , and Marvell (Nasdaq: MRVL  ) . Reducing such distractions from the plan of operation looks smart when you consider the giants Conexant still faces in the broadband access arena, like Motorola (NYSE: MOT  ) , Cisco Systems (Nasdaq: CSCO  ) , and Alcatel-Lucent (NYSE: ALU  ) .

Conexant fell hard when the Internet bubble popped, and it's been living in Penny-Stock County for years -- curiously enough, without getting delisted for falling below the Nasdaq's $5-a-share initial listing requirement. Crawling back over that threshold without resorting to reverse splits would make this stock a three-bagger from today's levels.

It can be done if management's given enough time. What's another year -- or two?

Further Foolishness:

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 539640, ~/Articles/ArticleHandler.aspx, 10/22/2016 3:25:35 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 6 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
CNXT.DL $0.00 Down +0.00 +0.00%
Conexant Systems,… CAPS Rating: ***
ATHR.DL $0.00 Down +0.00 +0.00%
Atheros Communicat… CAPS Rating: ****
BRCM.DL $0.00 Down +0.00 +0.00%
Broadcom CAPS Rating: ****
CSCO $30.15 Down -0.01 -0.03%
Cisco Systems CAPS Rating: ****
MRVL $12.90 Down -0.15 -1.15%
Marvell Technology… CAPS Rating: *****
MSI $73.62 Up +0.05 +0.07%
Motorola Solutions CAPS Rating: ***