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Shares of Conexant jump 38 percent

Chipmaker Conexant Systems watches its stocks soar after the company announces it will split in two.

Shares of chipmaker Conexant Systems soared $14.31, or 38 percent, to $51.38 today, after the company announced late yesterday that it would split in two.

The Newport Beach, Calif.-based company said it will spin off its network-access division, which makes chips for the Internet-infrastructure market. The remaining company will house all of Conexant's other chipmaking businesses, including semiconductors for cell phones, modems and other consumer electronics.

Conexant shares closed at $37.06 yesterday, before the company announced its news. The stock opened today at $47.50, rising 28 percent in after-hours and before-hours trading.

Shares of Conexant were further buoyed this morning by a series of analyst upgrades. SG Cowen Securities and C.E. Unterberg Towbin both raised Conexant to a "strong buy" from a "buy." Chase Hambrecht & Quist upped its rating to "buy" from "market perform."

"We had previously rated the stock Market Perform due to risks in the Wireless and Personal Computing parts of the business," wrote Chase H&Q analyst Jeffrey Lipton. "However, with the planned spin-off, we expect investors to de-emphasize weak performances in these businesses and isolate these risks from the valuation of Network Access."

Conexant said it will spin off the Internet-infrastructure chip company in a two-step process. The first step, targeted for January, will be an initial public offering of less than 20 percent of the company's stock in the new company. This will be followed within six months by a tax-free distribution of the remaining shares to Conexant shareowners.