Conexant Maintains Hold Rating

Conexant Systems, Inc. CNXT has improved liquidity and removed some downside risk buy analysts are still waiting for indications that CNXT can maintain market share and demonstrate traction in new growth areas. In a research report Jefferies & Company writes, "We expect Conexant to report CQ3 revenue roughly inline with St. of $61MM which is at the low-end of guidance of $56-57MM. We believe Audio revenue was down slightly Q/Q due to the well known softness in the notebook channel as well as some share erosion at Tier 1 OEMs due to its prior liquidity issues and a declining attach rate of modems from notebooks. We believe modems were down ~20% Q/Q due to the elimination of modem requirements in Japanese DTVs and weaker STB sales. We estimate Imaging was roughly flat Q/Q as our checks suggest demand for its consumer photo printers slowed after the several quarters of recovery partially offset by improving enterprise demand." CNXT is currently trading up on the day at $1.61