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| Saturday, July 29, 2006 |
Conexant Shares Fall After Widening 3rd-Quarter Loss
Shares of Conexant Systems Inc. fell sharply in midday trading on Friday after the company reported a wider third-quarter loss, and an analyst downgraded the stock.
Conexant, which has traded between $1.57 and $3.90 over the last year, was down 24 cents, or 12.5 percent, to $1.69 on the Nasdaq.
On Thursday the company said it lost $67.1 million, or 14 cents per share, which ballooned from a loss of $32.2 million, or 7 cents per share, last year.
Credit Suisse analyst Jeff Loff downgraded the stock to "Underperform" from "Neutral" and said revenue growth and margin expansion were limited. He also noted that the company has $537 million in debt due within the year and just $375 million in cash.
"The ability of cash flow from operations to help close this gap is now weaker and we expect Conexant to raise $100 million to $200 million of debt this year to meet its obligations," Loff wrote in a note.
Baird analyst Tristan Gerra, who has an "Outperform" rating on the stock, took a different approach, calling it a "great leverage story."
"Despite a third-quarter slowdown reducing our estimates, we see significant earnings per share leverage to the story, both from top-line (new product ramps in 2007) and profitability standpoints, while deleveraging in the first half of 2007 should help the valuation," Gerra wrote in a note to clients.
Gerra lowered his estimates for fiscal 2006 revenue and earnings to $971.5 million and 12 cents a share from $990.5 million and 13 cents, and for fiscal 2007 revenue and earnings to $1.05 billion and 18 cents a share from $1.14 billion and 26 cents a share. |
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