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Conexant Systems Inc.'s recent spin-off announcement may have surprised many, occurring less than two years after the company itself emerged from parent Rockwell International Corp.
But in some ways, the move should have been a foregone conclusion. Even before Conexant completed
its break from Rockwell last year-a move designed to free the communications chip maker from its oldeconomy parent-the death knell had begun ringing for Conexant's mainline dial-up modem business.
Granted, modem chips are a cash cow now, generating about $184 million in Conexant's most recently reported quarter and representing the largest single business unit at about 35% of sales.
But with the emergence of high-speed Internet access, cable modems and even sexy wireless Web access, the days of the lowly dial-up modem clearly are numbered.
That's why Conexant has moved beyond modems and into some of the hottest segments of the communications sector. Trouble is, many investors still equate it with modems.
The distinction became painfully obvious this year as Broadcom Corp., the Irvine chip maker that competes with Conexant in several areas, more than tripled its market value to $54 billion. During the same time period, Conexant's market value barely has budged at $11 billion or so, with two consecutive quarterly losses and...