The Red Bank, New Jersey-based company now expects revenue for the quarter to July 2 to be in the range of $265m to $270m, compared with its prediction in April of revenue in the $308m to $323m range.
It said this will lead to pro forma earnings per share of $0.02, down on its forecast of a range between $0.03 to $0.05.
While chipsets that provide connectivity to wireless networks are now fitted as standard to portable computers, the buoyancy of the market has attracted new vendors prepared to accept rock-bottom prices as they build market share.
The shortfall is entirely due to problems in the wireless LAN business. Sales to other sectors, such as dial-up and subscriber-line connectivity and set-top box and PC video applications were essentially flat.
CEO Armando Geday said that a number of Taiwan-based chip suppliers emerged with extremely low-priced wireless LAN chipsets, displacing incumbent suppliers in certain high-volume applications.
This new competitive landscape has emerged at a critical juncture in the evolution of the wireless LAN market as it moves from the 11Mbps 802.11b standard to the 54Mbps 802.11g standard. Geday said the orderly and fairly predictable progress of this transition greatly accelerated in the quarter as a result of the new low-cost entrants and this caused 802.11g products to be priced at levels comparable to 802.11b products.
While he expects the wireless LAN business to continue to be challenging, Geday said Conexant plans to protect and extend its position, and sees an outstanding growth opportunity as wireless connectivity become ubiquitous in various devices and appliances.
Conexant expanded its product range with the $20m acquisition of Amphion Semiconductor Ltd, a Belfast, UK-based maker of DSPs. The attraction of Amphion was its H.264 video compression technology which Connexant plans to add to its products for the digital broadcast market.
