Communications chip maker Conexant Systems (NASDAQ:CNXT) reported Q1 results last night, meeting Wall Street expectations with $12.35 million in earnings, excluding one-time gains and charges. Revenue of $177 million slightly topped median expectations, while the company projected weakness in its next quarter -- a revenue decline of 3% to 5% due to normal, seasonal factors.

All in all, not a very exciting report. But investors were more intrigued with Conexant's progress on jumpstarting growth in its myriad businesses. In an attempt to increase shareholder value, Conexant has created a complex web of market-focused companies. Completely opposite from the "merge and integrate" fad of the 1990s, Conexant's business strategy has come full circle since spinning out of Rockwell International in 1999.

Like a recluse teen now away at college, Conexant went on a buying binge in 1999 and 2000, using stock to gobble up several communications companies. As 2000 wore on and customer spending ceased, the company caved to restructuring. Rather than just slash payroll, Conexant opted for an ambitious strategy of spinning out divisions while retaining partial interest.

The company embarked on a "focused business creation strategy" -- PR speak for slicing and dicing. First to go was the Internet infrastructure business in 2001, which is now publicly traded as Mindspeed Technology (NASDAQ:MSPD).

Early in 2002, Conexant merged its wireless division with Alpha Industries to create Skyworks Solutions (NASDAQ:SWKS). The company then cut a deal with the famed private investment firm Carlyle Group to form the semiconductor foundry Jazz Semiconductor (which recently filed for an IPO). Today, all that is left in Conexant is the fabless broadband communications segment, which, like the other companies, relies on Jazz for its chip fabrication.

With the lightened load, Conexant's plan seems to be working. The stock is flying, up 400% since last year, and Mindspeed has doubled in the last four months on growing sales. Time will tell though if the business strategy is really behind the rejuvenation -- Conexant's cross-town competitor Broadcom (NASDAQ:BRCM) and other peers have been posting surging sales as well, lifting the semiconductor sector.

So, what are the fringe benefits to being a sugar daddy? Stock of course -- Mindspeed issued Conexant warrants for 30 million shares in return for early funding (at a price of $3.408 per share). If the unbridled euphoria for VOIP and broadband players continues, Conexant could cash out a few hundred million dollars from the deal.

Dave Mock once ate a Sugar Daddy and learned that the sticky candy can easily pull out fillings. He is co-author of Tapping into Wireless and can be reached via email.