3SOF

May have found support @ $1.75

Recent CandleStick Analysis
Very Bullish
Sept-25-2006 Bullish Engulfing 

52wk Range: 1.60 - 3.90

Volume: 20,629,528
Avg Vol (3m): 13,885,300

Technicals
Most Actives
Percentage Gainer

Last Price Quote is:
2.70%above 13-day EMA
-4.20%below 50-day EMA
RS Rating: 8 

Fundamentals
Key Data:
Market Cap (M): $854.42 
P/E Ratio: NA 
PEG Ratio: 4.47222 
Next Earnings: 10/26/2006
Last Analyst Rating: Underperform

Profile: Conexant Systems, Inc. engages in the design, development, and sale of semiconductor system solutions worldwide. It offers semiconductor devices, software, and reference designs for use in broadband communications applications, enterprise networks, and digital home networks. The company's broadband access products include a set of digital subscriber line products for customer premises equipment and central office applications, and products for passive optical network applications.
Website: http://www.conexant.com
Market Cap: 928M
Financial Trends:


Trading Idea:
This is a Technical play; CNXT had an important breakout last August after performing a bearish trend for several months. The stock had a first rebound attempt, but it was not effective, it just retested $1.75 (first breakout level) after 1 month of consolidation.

Yesterday session combined a powerful candle with some momentum divergence and good volume, suggesting at least short term continuation. We expect support near $1.75/$1.80, and good potential at least above $ 2.20 if this comes to be a real reversal candle.



This is not our regular type of play, but being bullish on the NDX and SOX, we need to hold some more plays on the semi sector right now, CNXT looks solid.

Trading Plan:
Buy CNXT today at or near the open.

Regards,

CNXT up +6% on the after hours trading

Quote from: Ramsburg on September 26, 2006, 05:07:52 PM

CNXT up +6% on the after hours trading

And here is why, looks like the chart was telling a story. Nice timing it would seem:

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--Sept. 26, 2006--Conexant Systems, Inc.
(NASDAQ:CNXT) announced today that it expects to receive cash proceeds of
approximately $100 million when Acquicor Technology, Inc. (AMEX:AQR), a special
purpose acquisition company, completes its merger with Jazz Semiconductor, Inc.,
a privately held specialty wafer manufacturing company.


Under the terms of the definitive agreement announced today, Jazz will merge
with a wholly owned subsidiary of Acquicor in an all-cash transaction valued at
$260 million, subject to certain adjustments. Completion of the merger is
expected to occur in the first quarter of calendar 2007. Acquicor and Jazz
provided additional transaction details in their separate press release.


Conexant owns approximately 42 percent of Jazz, a wafer foundry that provides
advanced specialty process technologies for the manufacture of highly integrated
analog and mixed-signal semiconductor devices. Jazz was formed in March 2002 as
a joint venture between Conexant and The Carlyle Group, a leading global private
equity firm. Conexant contributed its specialty process technologies and
the manufacturing equipment in its Newport Beach wafer fabrication facility to
the joint venture in return for its stake in the new company. Prior to that, the
Newport Beach fabrication facility was wholly owned by Conexant.


Jazz's initial customers consisted of Conexant and Skyworks Solutions, Inc., a
publicly traded company created from the spin-off of Conexant's wireless
business and the merger with Alpha Industries in June 2002. Since then, Jazz has
successfully expanded and diversified its customer base. These new customers
include Freescale Semiconductor, Inc., Marvell Technology Group Ltd., Texas
Instruments, Inc., and RF Micro Devices, Inc.


"Jazz has been an important supplier for Conexant since its inception, and I
expect our relationship to continue," said Dwight W. Decker, Conexant chairman
and chief executive officer. "Over the past four years, the Jazz team has
consistently made outstanding progress on all fronts in a highly competitive
environment. The company began manufacturing for just Conexant and its spin-off
companies and is now a supplier to almost 100 new customers from all over the
industry. I expect that the merged company and senior management team
will continue to build on this record of success.


"From a Conexant perspective, our share of the proceeds from this transaction
will significantly strengthen our balance sheet and provide us with improved
liquidity," Decker added.


Conexant expects to record a modest gain when the Acquicor-Jazz transaction
closes.

AP
Conexant to Receive $100M Through Jazz
Tuesday September 26, 5:56 pm ET 
Conexant to Receive $100 Million on Acquicor's Purchase of Jazz Semiconductor


NEWPORT BEACH, Calif. (AP) -- Conexant Systems Inc., which makes chips used in communications devices, said Tuesday it expects to receive about $100 million in cash through its ownership stake of Jazz Semiconductor Inc., which announced merger plans earlier in the day.


Jazz is merging with Acquicor Technology Inc. in a $260 million deal expected to close in next year's first quarter. Conexant owns a 42 percent share of Jazz, a privately held specialty wafer manufacturer.

Jazz was formed in 2002 as a joint venture between Conexant and private equity firm Carlyle Group. Conexant said it expects to record a modest gain when the Acquicor-Jazz transaction closes.

"From a Conexant perspective, our share of the proceeds from this transaction will significantly strengthen our balance sheet and provide us with improved liquidity," Chairman and Chief Executive Dwight W. Decker said in a statement.

Conexant shares rose 6 cents, or 3.1 percent, to $1.98 in aftermarket trading, after closing unchanged at $1.92 on the Nasdaq. Shares have traded between $1.60 and $3.90 over the past year.

Looks like this might turn into a good trade rams I considered buying this for my port today as well but filled up my last 2 positions with CLEC and CROX this morning.

Chart looks good and good news. Recipe for $$ 
applauds
-fous

Update:
Good news after the bell:
- Conexant to Receive $100M Through Jazz
Conexant to Receive $100 Million on Acquicor's Purchase of Jazz Semiconductor

Despite the good news after the close, CNXT was already performing some bullish pre-signs, the volume was up once again, and the stock made some short term highs. CNXT will probably open with a Gap Up, that gap will probably be filled, but we think this move will have short term continuation at least above $2.20.

Trading Plan:
Hold CNXT

Regards,

Update:
CNXT had a nice move, opening with a gap up following the recent news, but failed to close near the highs of the day, closing near the ema-50. We enjoyed the move, but not the candle itself...
We'll keep holding CNXT for now.

Trading Plan:
Hold CNXT

Regards,

Ramsburg,

SWKS jumped up 1.84 in AH today ahead of the CC tomorrows.

Since CNXT owns 6.2 millon shares on SWKS, what effect will this have on CNXT?

thx

Any comments on today's drop for CNXT???

Update:
CNXT is not behaving as expected; the stock had a sell off, retesting the short term ascending support again and reaching relative lows on an intraday spike.
Investors are showing concerns about CNXT debt, and apparently the $100M from Jazz was already discounted by the market.
We need CNXT to bounce back to the upside in order to hold this position on the 3SOF portfolio.

Trading Plan:
Hold CNXT
(We'll not be setting an automatic stop for this position yet, although the suggested stop price would be near $1.70)

Regards,

R,

Thank you.  I don't see how the $100M from Jazz was already discounted by the market.  Can you elaborate on this. Also, what part with Conexant's shares in SIRF, MSPD and SWKS play.

Quote from: bgoodman on October 05, 2006, 10:31:24 AM
R,

Thank you.  I don't see how the $100M from Jazz was already discounted by the market.  Can you elaborate on this. Also, what part with Conexant's shares in SIRF, MSPD and SWKS play.

Hi bgoodman,
Not a big deal, this anticipation I talked about is just the 2 candles before September 27, the day the news about the $100M from Jazz was out, stock was up from $1.77 to $2.04 before and then goes back to the start point (I see this as a news reaction noise for now).

Update:
Nice reaction on the support, CNXT still needs some more volume at this point, but we expect to see it above $2.00 short term.

Trading Plan:
Hold CNXT
(We'll not be setting an automatic stop for this position yet, although the suggested stop price would be near $1.70)

Regards,

Update:
I'm starting to enjoy this consolidation pattern again...
CNXT is reacting on its main lines, with volume confirming the important price spots, making this consolidation area a symmetrical triangle now. Yesterday's close was on the top of the triangle, so if we watch another session like this and CNXT manage to close above $1.94 we may finally watch our desired upside move.
We are keeping the same plan now, and watch today's session for positive developments.

Trading Plan:
Hold CNXT
(We'll not be setting an automatic stop for this position yet, although the suggested stop price would be near $1.70)

Ramsburg,

Thanks for the update. I think CNXT will rapidly get back to $2.50 and eventually continue pass $3 back toward the recent 52-week high.

Nothing negative has happened since CNXT was at $3.80 before the May 11th Market crash hit hard.  Nothing fundamentally has changed since May 11th for Conexant.  It will return to the $3 plus range right before earnings, or shortly thereafter.

IMHO, CNXT is a steal below $2.75......Good luck longs.