11/3/2003 - Conexant Systems, Inc. (Nasdaq: CNXT), a worldwide leader in semiconductor system solutions for digital home information and entertainment networks, announced revenues of $164.7 million for the fourth quarter of fiscal 2003, which ended October 3, 2003. Fourth fiscal quarter revenues increased 9 percent over third fiscal quarter revenues of $151.0 million, and increased 24 percent over 2002 fourth fiscal quarter revenues of $133.1 million. Fourth fiscal quarter pro forma operating profit of $6.7 million increased by 106 percent from $3.2 million in the third fiscal quarter of 2003. On a pro forma basis, income from continuing operations for the fourth fiscal quarter of 2003 was $0.01 per diluted share, compared to $0.00 per diluted share in the third fiscal quarter. Revenue from ADSL modem and satellite set-top box solutions, two key growth areas for the company, increased more than 30 percent sequentially.
Fiscal 2003 revenues of $600.0 million increased 15 percent over fiscal 2002 revenues of $521.7 million. For fiscal year 2003, the company achieved pro forma operating income of $10.8 million compared to a pro forma operating loss of $50.4 million for fiscal 2002. On a pro forma basis, income from continuing operations for fiscal 2003 was $0.00 per diluted share, compared to a loss of $0.26 per diluted share in fiscal 2002. Financial results for continuing operations exclude the performance of Mindspeed Technologies, Inc., which was spun off to Conexant shareowners in a tax-free transaction in June 2003, and the performance of the company’s former wireless business, which was spun off to Conexant shareowners and merged to form Skyworks Solutions, Inc. in a tax-free transaction in June 2002.
“During fiscal 2003 Conexant completed its strategic transformation from a broad-based communications semiconductor supplier into a family of focused companies serving distinct markets,” said Dwight W. Decker, Conexant chairman and chief executive officer. “We begin our new fiscal year as a growing company with an accelerated earnings opportunity focused exclusively on delivering the technology and products that are driving the broadband digital home.
“Conexant’s fourth fiscal quarter revenues increased 9 percent sequentially to $164.7 million, and 24 percent over the same quarter last year,” Decker continued. “Our revenue performance was driven by continued progress in our growth initiatives as we shipped a record number of set-top box components in the quarter and delivered another quarter of record unit shipments of our ADSL client-side modems. Combined, these two key product areas grew more than 30 percent sequentially and nearly 60 percent from the year-ago period.”
Conexant’s pro forma results are a supplement to financial statements based on generally accepted accounting principles (GAAP). Conexant uses pro forma information to evaluate its operating performance and believes this presentation provides investors with additional insight into its underlying operating results. A full reconciliation between the pro forma and GAAP results from continuing operations is included in the accompanying financial data. Presented on a GAAP basis, the net profit for the fourth quarter of fiscal 2003 was $37.2 million, or $0.12 per diluted share, compared to a net loss of $49.1 million in the third fiscal quarter of 2003, or a loss of $0.18 per diluted share. Excluding the loss from discontinued operations, GAAP income from continuing operations for the fourth quarter of fiscal 2003 was $37.2 million, or $0.12 per diluted share, compared to $3.2 million in the third fiscal quarter of 2003, or $0.01 per diluted share.
Gross margin for the fourth fiscal quarter was 44 percent, up approximately one percent from the previous quarter. Pro forma quarterly operating expenses of $65.4 million were in line with expectations, up $3.7 million from the previous quarter, primarily due to salaries, benefits and certain other operational costs associated with an additional week in the fourth fiscal accounting quarter. The company’s cash, cash equivalents and short-term investments totaled $175.5 million at the end of the quarter, reflecting a sequential increase of $10.5 million.
First Quarter Fiscal 2004 Outlook
“As we enter our new fiscal year, we expect to continue our steady growth with December quarter revenues forecasted to be up approximately 5 percent sequentially, in a range from $170 to $175 million, and we anticipate that we will further improve our gross margin to between 44 and 45 percent,” Decker said. “We expect first fiscal quarter operating expenses to return to a more normal level of approximately $62 million.
“Most importantly, for the third consecutive quarter, we plan to more than double our pro forma operating profit, demonstrating the continued leverage in our business model as we deliver on our accelerated earnings growth opportunity,” Decker concluded.
Note to Editors, Analysts and Investors
The Conexant fourth fiscal quarter 2003 conference call will take place on Thursday, October 30, 2003, at 2:00 p.m. PST/5:00 p.m. EST. To listen to the conference call via telephone, please call (800) 680-9685 (domestic) or 334-323-9854 (international); security code: Conexant. To listen via the Internet, please visit the investor relations section of Conexant’s Web site at www.conexant.com/ir. Playback of the conference call will begin at 5:00 p.m. PST on Thursday, October 30, and end at 5:00 p.m. PST on Friday, November 7. The replay will be available on Conexant’s Web site at www.conexant.com/ir or by calling (800) 858-5309 (domestic) or (334) 323-7226 (international); access code: 40313, pass code: 16809.
Conexant’s innovative semiconductor system solutions are driving digital home information and entertainment networks worldwide. The company has leveraged its expertise and leadership position in modem technologies to enable more Internet connections than all of its competitors combined, and continues to develop leading integrated silicon solutions for cable, satellite, terrestrial data and digital video networks. Key products include digital subscriber line (DSL) and cable modem solutions, home network processors, broadcast video encoders and decoders, digital set-top box components and systems solutions, and dial-up modems. The company also offers a suite of wireless data and networking components solutions that includes HomePlug®, HomePNATM and WLAN (802.11) components and reference designs. Conexant is a fabless semiconductor company and has approximately 1,450 employees. The company is headquartered in Newport Beach, Calif. To learn more, visit us at www.conexant.com.
Safe Harbor Statement
This press release contains statements relating to future results of Conexant (including certain projections and business trends) that are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to: the cyclical nature of the semiconductor industry and the markets addressed by the company’s and its customers’ products; demand for and market acceptance of new and existing products; successful development of new products; the timing of new product introductions; the availability of manufacturing capacity; pricing pressures and other competitive factors; changes in product mix; product obsolescence; the ability to develop and implement new technologies and to obtain protection for the related intellectual property; and the uncertainties of litigation, as well as other risks and uncertainties, including those detailed from time to time in the company’s Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
Conexant is a trademark of Conexant Systems, Inc. HomePlug is a registered trademark of the HomePlug Powerline Alliance, Inc. and HomePNA is a trademark of the Home Phoneline Networking Alliance.
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