Semiconductor company Conexant Systems Inc. (Nasdaq: CNXT) said on Monday that its second-quarter revenue fell 18.5 percent from the previous quarter, sending shares tumbling.
The firm, which designs and develops communications and network chips, said that its second-quarter revenue fell to $200 million, after reporting $245.5 million in revenue for the first quarter. It expects to break even on a core operating basis. Analysts polled by Thomson Financial expected revenue of $222.8 million.
â€œDuring the second fiscal quarter, in addition to anticipated seasonal weakness in our PC-related products, we saw greater-than-expected sequential revenue declines in our set-top box, multifunction peripheral, and DSL product lines,â€ said Dwight W. Decker, Conexant chairman and CEO.
Decker explained that revenue from its set-top box product line fell more than expected due in part to program schedule delays with service providers in the United States and Europe. The firm said that a product geared for use in 'all-in-one' printer, fax, and copying machines were hurt by higher-than-expected inventories at key customers.
Conexant appears to be in a 'perfect storm' scenario with pricing pressure, elevated inventory, and program delays impacting the business, Merrill Lynch analyst Mark Heller told clients on Monday.
Though we donâ€™t think weâ€™re in store for a repeat of late 2004 (when revenues declined to ~$140mn/qtr), a quick snapback in Conexantâ€™s business doesnâ€™t appear likely, he said.
Shares of the firm dropped 14 cents, or 8.48 percent, to $1.51 in late afternoon trading on the Nasdaq Stock Market.