Updated from 12:55 p.m. EDT
SAN FRANCISCO -- The sudden leaving by
CEO Daniel Artusi after
caught investors by surprise late Monday.
And the Street promptly registered its displeasure Tuesday, sending Conexant's shares down 13% to 46 cents in midday trading.
"The unexpected departure of CEO Dan Artusi is likely to interrupt Conexant's turnaround, which was the entire basis for our thesis and recommendation," wrote Oppenheimer analyst Allan Mishan in a note to investors. Mishan downgraded the Newport Beach, Calif., chipmaker to a perform rating from outperform.
Conexant said Artusi is leaving the company to pursue other outside opportunities, and said that he will be replaced by board member Scott Mercer as CEO. Christian Scherp, Conexant's worldwide sales chief, will fill Artusi's shoes in the role of president.
In a statement, Mercer said the company would continue to make progress on cutting costs and improving financial performance, but that the top priority is to determine the best way to increase customer and shareholder value. Mercer said Conexant's management team would assess the company's market and financial positions and establish a clear strategic direction for the company.
The change in leadership and direction is the latest sign of turmoil for the company, which makes chips for modems and television set top boxes and lost roughly $400 million in fiscal 2007. The company's stock has traded under $1 since December -- putting it at risk of getting delisted by the
exchange -- and is down more than 60% in the past 12 months.
Under Artusi -- a former CEO of
and a 24-year veteran at
erstwhile semiconductor group -- Conexant exited several businesses, including wireless networking chips, and reduced its headcount and operating expenses.
"We have been supportive of Conexant's turnaround because it appeared that the deep, necessary cuts were being made to remake the company by retaining its IP and customer relationships while shedding its bloated scale and soporific culture," wrote Oppenheimer's Mishan.
The appointment of Mercer, who has served on Conexant's board for five years, and the fact that Dwight Decker, the CEO that Artusi had replaced last June, remains the chairman of the board, suggests that the company could steer away from the cost-cutting plan and cling to its traditional business strategy, Mishan wrote.
Know What You Own
: CNXT operates in the semiconductor industry, and some of the other stocks in its field include
. These stocks were recently trading at $20.46, +1.54%, $5.40, +0.75% and $28.61, -0.38%, respectively. For more on the value of knowing what you own, visit TheStreet.com's