Senin, 26 Juli 2010

What the Heck Does Conexant Do?

ast Friday, Foolish godfather Tom Gardner wondered aloud what the heck Conexant Systems (Nasdaq: CNXT) does. How is this company different from any other semiconductor designer with a swooning long-term stock chart?
And that got me thinking. I would like to think that I know Conexant better than most, having covered the company from many angles in the past. This is a specialist in audio, video, and communications signal processing that faces off against like-minded chip slingers such as Marvell Technology Group (Nasdaq: MRVL), Silicon Laboratories, and Zoran (Nasdaq: ZRAN) when looking for customer signings. It's also a fab-less business, meaning that manufacturing is outsourced to third-party foundries. So far, so good.
The badIf you asked me at gunpoint why anybody would pick a Conexant chip over Marvell or Zoran, I'd probably be praying for my life really quick. Come up with an investment thesis? Same thing. Give me a browser and some time to do research, and I still come up empty-handed on both questions.

http://adf.ly/4T66Tom is right: Conexant can't explain what makes it special. Follow along as I try to figure it out, OK?
Let's start at the company's "about us" web page: "Conexant Systems is a leading provider of solutions for imaging, audio, embedded modem, and video surveillance applications – areas where the company has established leadership positions."
OK, but that tag line would work for Marvell or STMicroelectronics (NYSE: STM) too -- except that those other guys wouldn't brag about modem chips. Hold that thought.
How about the corporate governance credo off Conexant's investor relations site? Uh-oh, nothing but boilerplate blather that doesn't mean anything; no mission or vision, no clearly defined goals.
Investor presentations sounds like a promising resource. Oh, but it's empty. There are no press releases in the archives. SEC filings fare even worse -- you get a web server error there. Is anybody running this ghost ship? Would you help me count the tumbleweeds to the soothing sounds of crickets and loons?
The worseOK, so I have to get Conexant's 10-K statement off some other site. The business description there doesn't make me feel any better:

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