Exhibit 20
Editorial Contact: Investor Relations Contact:
Scott Allen Mike Cortright
(949) 483-6849 (949) 483-6773
[email protected] [email protected]
CONEXANT TO SEPARATE INTO TWO INDEPENDENT
COMMUNICATIONS SEMICONDUCTOR COMPANIES FOCUSED ON
INTERNET INFRASTRUCTURE AND PERSONAL NETWORKING
APPLICATIONS
Initial Public Offering of Internet Infrastructure Company Targeted for January
2001
NEWPORT BEACH, CALIF., Sept. 13, 2000 - Conexant Systems, Inc. (NASDAQ: CNXT)
today announced that its board of directors has approved a plan to separate
Conexant into two independent communications semiconductor companies in order to
focus its broad product and technology portfolio on two major market segments of
the rapidly growing communications semiconductor industry.
One company, comprised of Conexant's current Network Access Division,
will focus on providing complete semiconductor and software solutions for
manufacturers of Internet infrastructure equipment. The second company will
concentrate on personal networking applications by delivering semiconductor
systems solutions to manufacturers of products for mobile communications and the
broadband digital home. The second company will include Conexant's four other
product divisions: wireless communications, digital infotainment, personal
imaging, and personal computing.
Conexant intends to spin off the Internet infrastructure business as an
independent public company through a two-step process. The first step will
consist of an initial public offering of stock in the new company targeted for
January 2001. This will be followed within six months by a tax-free distribution
of the remaining shares to Conexant shareowners. Completion of the spin-off is
conditional upon receiving an IRS ruling that it will qualify as a tax-free
distribution.
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"The creation of two strong communications semiconductor companies
focused on the Internet infrastructure and personal networking markets is a
strategic milestone for Conexant," said Dwight W. Decker, Conexant chairman and
chief executive officer. "Over the past five years, we have successfully focused
our efforts and investments on building these two leadership businesses. Today,
they are quite different, characterized by distinct sets of both customers and
competitors. We believe that separating our Internet infrastructure and personal
networking businesses into two independent entities will allow each company to
sharpen its customer focus, enhance its competitive position, and realize its
full growth potential.
"Our Internet infrastructure business has grown 100 percent per year
over the past two years and is currently delivering gross margins of
approximately 65 percent," Decker continued. "In the past eight months, we have
augmented our strong internal product portfolio development with six
acquisitions to build an Internet infrastructure powerhouse capable of
approaching $1 billion in revenues over the next calendar year.
"The personal networking company will continue its focus on high
volume, high-growth opportunities with breakthrough solutions for DSL and cable
modems, digital set-top boxes, and accelerating diversification from CDMA to GSM
and TDMA digital cellular handsets," Decker said. "Over the past two years, this
business has more than doubled its shipments of personal networking products.
This year alone, it will bring the power of mobile communications and the
Internet to more than 200 million people worldwide."
The new Internet infrastructure company will be fabless, while the
personal networking company will retain Conexant's process technology and
manufacturing assets. The two companies will enter into a multi-year technology
and marketing alliance in order to continue Conexant's strategy of providing
differentiated end-to-end connectivity solutions that leverage the shared
communications link between the edge of the Internet and personal networking
products. Additional details concerning the separation, including the management
and board of directors of each company and which company will retain the
Conexant name, will be announced in the coming months.
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THE NEW INTERNET INFRASTRUCTURE COMPANY
Internet infrastructure product sales are expected to exceed $550
million in Conexant's current fiscal year, ending Sept. 29, 2000, accounting for
approximately 30 percent of total company revenues. The Internet infrastructure
business offers a complete portfolio of semiconductor and software solutions
ranging from physical-layer access devices at the edge of the Internet up
through switch fabric and network processor products for the high-speed optical
core.
Products for the Internet infrastructure are grouped into three
high-growth areas: wide area network (WAN) transport, multi-service access, and
broadband access. Solutions for WAN transport focus on packet-based optical
networks by providing a complete range of physical-layer transceivers, ATM
products, and network processors. The multi-service access business includes a
comprehensive family of multi-service carrier IP gateway products with
industry-leading voice over IP solutions. The broadband access portfolio offers
one of the industry's broadest lines of symmetrical and asymmetrical DSL
solutions.
Internet infrastructure customers include tier-one manufacturers of
Internet infrastructure equipment such as Cisco Systems, Lucent Technologies,
Nortel Networks, and Alcatel; as well as emerging leaders such as Juniper
Networks, Redback Networks, and Sycamore Networks.
THE NEW PERSONAL NETWORKING COMPANY
Personal networking product sales are expected to exceed $1.5 billion
in Conexant's current fiscal year and account for approximately 70 percent of
total company revenues. The personal networking company will focus on delivering
integrated semiconductor and software solutions for mobile communications and
the broadband digital home.
The personal networking company's product portfolio will address
high-growth markets including broadband cable and DSL modems, home networking,
and digital cable and satellite set-top box solutions. Products for home and
small-office applications include digital imaging and video devices, and data
and facsimile modems. Mobile
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communications solutions comprise one of the industry's broadest wireless
product offerings for CDMA, GSM, and TDMA digital cellular handsets, and include
power amplifiers, radio frequency subsystems and complete systems.
The personal networking company will continue to benefit from the
ability to leverage common product feature sets, marketing and sales channels,
and high-volume manufacturing capabilities across its personal networking
communications products.
Personal networking customers include the leading manufacturers of
mobile and broadband access communications devices, personal computers, and
Internet gaming consoles, such as Ericsson, Nokia, Samsung, Hughes, Echostar
Communications, Compaq Computer, Dell Computer, Hewlett-Packard, Canon, Sharp,
Nintendo, Sega, and Sony.
NOTE TO ANALYSTS, EDITORS AND INVESTORS
A conference call regarding this announcement will take place
Wednesday, Sept. 13, 2000, at 2:30 p.m. PDT, 5:30 p.m. EDT. To listen to the
conference call via phone, please call (800) 680-9685 (domestic) or (334)
323-9854 (international); security code: Conexant. Playback of the conference
call will begin at 4:30 p.m. PDT on Wednesday, Sept. 13 and end at 4:30 p.m. PDT
on Friday, Sept. 15. The replay will be available by calling (800) 858-5309
(domestic) or (334) 260-0890 (international) access code: 40021, passcode:
64657.
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SAFE HARBOR STATEMENT
This press release contains statements relating to future results of the company
(including certain projections and business trends) that are "forward-looking
statements" as defined in the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those projected as a result of certain
risks and uncertainties. These risks and uncertainties include, but are not
limited to: risks and uncertainties relating to the proposed separation of the
company's Internet infrastructure business, including the impact of the proposed
separation on the results of operations and the competitive positions of the
Internet infrastructure and personal networking businesses; the impact of the
proposed separation on the company's stock price and its relationships with
customers and employees; the company's ability to retain and motivate key
employees; the potential for business disruption; the tax consequences of the
proposed separation to the company and its shareowners; the risks that the
proposed separation may not be completed in a timely manner or at all; and other
risks and uncertainties, including: global and regional market conditions,
including, but not limited to, the cyclical nature of the semiconductor industry
and the markets addressed by the company's and its customers' products; demand
for and market acceptance of new and existing products; successful development
of new products; the timing of new product introductions; the availability and
extent of utilization of manufacturing capacity; pricing pressures and other
competitive factors; changes in product mix; fluctuations in manufacturing
yields; product obsolescence; the ability to develop and implement new
technologies and to obtain protection for the related intellectual property; the
successful implementation of the company's acquisition and diversification
strategies; labor relations of the company, its customers and suppliers; and the
uncertainties of litigation, as well as other risks and uncertainties, including
but not limited to those detailed from time to time in the company's Securities
and Exchange Commission filings. These forward-looking statements are made only
as of the date hereof, and the company undertakes no obligation to update or
revise the forward-looking statements, whether as a result of new information,
future events or otherwise. Other brands and names contained in this release are
the property of their respective owners.
ABOUT CONEXANT SYSTEMS, INC.
With a revenue run-rate of approximately $2 billion per year, based on the most
recently completed quarter, Conexant is the world's largest independent company
focused exclusively on providing semiconductor solutions for communications
electronics. With more than 30 years of experience in developing communications
technology, the company draws upon its expertise in mixed-signal processing to
deliver integrated systems and semiconductor products for a broad range of
communications applications. These products facilitate communications worldwide
through wireline voice and data communications networks, cordless and cellular
wireless telephony systems, personal imaging devices and equipment, and emerging
cable and wireless broadband communications networks. The company aligns its
business into five product platforms: Network Access, Wireless Communications,
Digital Infotainment, Personal Imaging, and Personal Computing. Conexant is a
member of the S&P 500 and Nasdaq-100 Indices. For more information, visit
Conexant at www.conexant.com.
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