Conexant Systems cuts earnings outlook

Communications chip maker Conexant Systems Inc. on Tuesday cut its quarterly earnings forecast, citing weak demand for wireless local area network products in the face of cheaper Taiwanese competition.

The New Jersey company said it now sees earning 2 cents per share in the quarter ended July 2, compared with its previous view of 3 cents to 5 cents. The forecast is on a non-generally accepted accounting principles basis.

“A number of Taiwan-based chip suppliers emerged with extremely low-priced solutions, displacing incumbent suppliers in certain high-volume applications,” said Armando Geday, Conexant’s chief executive officer.

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The company forecast revenues of between $265 million to $270 million, compared with expectations in April in the range of $308 million to $323 million.

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Competition pushed prices lower in an already pressured market as Conexant’s customers lost market share, the company said.

In the third quarter, operating expenses came in lower than anticipated and gross margin should remain in the expected range of 42 percent, Geday added.
Conexant shares closed Friday at $4.08 on Nasdaq.