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Conexant falls on 1Q warning, analysts split

Shares of wireless components maker Conexant dropped 26 percent Thursday after the company warned for its first quarter and received a couple of analyst downgrades.

The company's stock fell 5.38 to 15.

After market close yesterday, Conexant said that it would miss revenue and earnings estimates for its first quarter, due to a slowdown in demand for its personal networking products. The company now expects revenue to drop by 20 percent to $400 million to $425 million, with earnings between 5 to 10 cents a share, excluding charges. First Call estimates had called for 11 cents a share.

Analysts cut the company's estimates across the board, but most maintained their ratings. C.E. Unterberg, Towbin and Banc of America Securities, however, both lowered their ratings on the stock.

On the negative side, analyst Karl Motey at C.E. Unterberg, Towbin cut his rating on the stock to "buy" and reduced his price target to $28 from $50. Revenue and earnings were also slashed, with a loss of 7 cents predicted for the first quarter.

Motey noted the company's prospects look promising over the long term, and was bullish on the upcoming IPO of its Internet division.

Analyst Alex Gauna at Banc of America also cut the stock from "strong buy" to "buy and lowered estimates for the upcoming quarter and fiscal 2002. Gauna added that the new numbers were "particularly conservative" given the companies current troubles.

Lehman Brothers analyst Daniel Niles lowered his estimates on the company but maintained his "outperform" rating and $60 price target on the stock.

In a research note, Niles said the reduction were due to the company's low visibility. "We are therefore adopting an extremely conservative stance and we feel that the company should be able to exceed our estimates towards the latter half of (calendar 2001) as wireless returns to growth and the mix shift away from personal computing benefits margins," he added.

Vivian H. Griffith at Frost Securities lowered estimates but maintained the target price and "buy" rating on the stock.

At SG Cowens analyst Rick Billy similarly cut estimates but maintained a "buy" rating and $20 price target on the stock.