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Unlocking shareholder value is one thing, but holy valuation! Rockwell International Corp.'s spinoff of Conexant Systems is looking almost embarrassing for the former parent company.
Since shedding its Newport Beach-based semiconductor systems business 13 months ago, Rockwell's market cap has moved up about $1.3 billion, or 17%, roughly in line with the percentage increases in the S&P 500 and the Dow Jones Industrial Average. As of late last week, Rockwell's market capitalization was about $8.9 billion.
But Conexant, whose market cap was only a fraction of Rockwell's at the time of the split, has seen its stock price rocket more than 1,500%, creating a company with a market cap of $24.9 billion, or nearly three times that of its former parent.
Don't tell your accountant, but sometimes 1+1 doesn't equal 2.
Despite the seemingly endless wave of corporate mega-mergers and aquisitions, some companies are growing big by thinking small, or at least smaller pieces. More companies are setting high-growth units free in an attempt to cash in on a tech-infatuated market, including General Motors, which is issuing a tracking stock for its Hughes Electronics division, and Bell Canada, which recently spun off cellular-phone unit, Nortel Communications.
Homegrown Spinoffs
But two of the most dramatic examples are right here in OC. There's Conexant, and then there's QLogic Corp.
When OC computer equipment maker Emulex Corp. spun off QLogic in 1994, both companies were small-cap players. Today, Emulex is worth $4.6 billion, impressive until compared to QLogic, which is...