Conexant Second Fiscal Quarter Performance Exceeds Expectations Driven by Revenue Growth Across All Three Businesses; Mindspeed Business Rebounds With 34 Percent Sequential Growth.

Business Editors & High-Tech Writers

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--April 17, 2002

Conexant Systems, Inc. (Nasdaq:CNXT), a worldwide leader in semiconductor system solutions for communications applications, today announced revenues of $241 million for the second quarter of fiscal 2002, which ended March 29, 2002.

Revenues increased 5 percent from first quarter fiscal 2002 revenues of $229.5 million, driven by growth in each of the company's three businesses. Mindspeed Technologies(TM), the company's Internet infrastructure business, grew 34 percent, and wireless communications and broadband access each delivered growth of 3 percent sequentially.

The pro forma net loss for the second quarter was $88.3 million, or $0.34 per share, an improvement of $19.4 million over the pro forma net loss of $107.7 million, or $0.42 per share, in the prior quarter. Pro forma results exclude amortization of intangible assets and special charges.

"Conexant's second fiscal quarter performance exceeded expectations on both the top and bottom lines," said Dwight W. Decker, Conexant chairman and chief executive officer.

"We delivered sequential growth in all three businesses in a period that is traditionally weak for our addressed markets, and we improved the level of our pro forma operating loss by 20 percent sequentially, compared to the 10 percent reduction we anticipated at the beginning of the quarter.

"Entering the quarter, we communicated our expectations for a 10 percent increase in Mindspeed revenues. Actual sequential growth of 34 percent indicates that this business is now positioned solidly on its path to recovery. We are also very pleased that our wireless communications and broadband access businesses grew for a third consecutive quarter."

Mindspeed revenue growth was driven by increased demand across its entire portfolio of Internet access and wide area network transport products.

Wireless communications growth resulted from market share gains in power amplifiers, strength in radio frequency subsystems, and record unit shipments of complete global system for mobile communications (GSM) general packet radio service (GPRS) cellular system solutions.

Broadband access revenues were driven by strength in the company's digital media gateway portfolio, which includes ADSL and cable modems as well as set-top box (STB) and home networking solutions.

Product and Business Highlights

Mindspeed Technologies

Mindspeed Technologies introduced the industry's first single-chip digital solutions that perform critical jitter-attenuation and signal de-synchronization functions in both telecommunications and data communications equipment surrounding the edge of the optical network.

Mindspeed's multi-port, low-power digital jitter-attenuation (DJAT) devices replace discrete analog components and give OEMs more system reliability and faster time-to-market.

Mindspeed also announced that Huawei Technologies selected its AnyPort(TM) multi-service access processor technology for its next-generation carrier-class multi-service access switch.

Mindspeed's solution will enable Huawei to support the rapidly growing voice-over-packet (VoP) and remote access server (RAS) markets in Asia with a single, versatile solution that significantly reduces time-to-market while improving performance through lower system-processing overhead.

Mindspeed expanded its crosspoint switch family with the addition of three low-power, 3.2 Gbps crosspoint switches that include integrated input equalization to optimize performance and simplify the system design process.

The 68x68, 34x34 and 17x17 crosspoint switches were designed for use in a wide variety of equipment including synchronous optical network (SONET) add/drop multiplexers, small storage area network (SAN) switches, dense wave division multiplexing (DWDM) systems, and protection switching.

Wireless Communications

The company's wireless communications business announced a new line of wideband power amplifier (PA) modules based on gallium arsenide heterojunction bipolar transistor (GaAs HBT) process technology. This series targets next-generation digital cellular systems, paging networks, personal communications systems, wireless local loop applications, and mobile radio base stations.

Conexant's leadership position in code division multiple access (CDMA) PA modules was further enhanced as the company earned design wins from 70 percent of the handset manufacturers certified to operate on China's recently launched nationwide CDMA network.

The company also continued to expand its direct conversion transceiver (DCR) customer base. Benq Corp., Chi Mei Communication Systems, and Sierra Wireless selected Conexant's DCR for use in a variety of GSM/GPRS products including PC cards, modules and handsets.

In December, Conexant announced its intent to merge its wireless business with Alpha Industries Inc. During the quarter, the two companies made significant progress in support of the transaction. In February, the Federal Trade Commission granted early termination of the waiting period on the Hart-Scott-Rodino pre-merger notification filing.

In March, both companies jointly filed requisite documents with the Securities and Exchange Commission (SEC). Recently, the companies received comments back from the SEC and responded with updated filings. The transaction remains on track to be completed prior to the end of the current quarter.

Broadband Access

Broadband access highlights included the introduction of a single-chip, interactive cable STB system solution. This solution enables STB manufacturers to offer advanced, fully interactive broadband home gateways and other cable STB solutions at a significantly lower cost than products based on multi-chip solutions.

The company also announced that it has teamed with Alticast to develop a complete digital video broadcasting-multimedia home platform (DVB-MHP) STB solution.

Broadband access expanded its portfolio of broadcast video solutions with a family of high-definition television (HDTV) video encoders. The new encoders allow users to view PC, DVB, game console and other STB content on digital or analog televisions.

Conexant and Lineo(R) announced embedded Linux support for Conexant's home network processor line, enabling broadband peripheral manufacturers to lower software development costs and reduce product development time.

The company's InfoSurge(TM) single-chip cable modem solution and silicon tuner received CableLabs(R) DOCSIS 1.1 certification. In addition, Samsung Electronics received DOCSIS 1.1 certification for a new product based on Conexant's InfoSurge solution.

The New Specialty Foundry Company

Conexant and The Carlyle Group, a leading global private equity firm, completed the transaction to form the world's first pure-play specialty foundry company.

The new company will manufacture semiconductor wafers using industry-leading specialty process technologies such as silicon germanium bipolar CMOS (SiGe BiCMOS) for customers targeting high-performance applications such as wireless communications and optical networking.

Third Quarter Fiscal 2002 Outlook

"Following our solid performance in a seasonally weak March quarter, we expect all three Conexant businesses to again grow sequentially," Decker said.

"In particular, we believe that our Mindspeed business will continue its recovery with a sequential revenue growth of at least 10 percent, driven primarily by demand for products addressing network edge and metropolitan area network applications.

"We expect the growth in our broadband access business will be led by increased ADSL and cable modem demand, while our growth in wireless communications will be driven by demand for our power amplifier, radio frequency, and cellular system solutions.

"In total, we expect Conexant's third fiscal quarter revenues to grow 3 to 5 percent sequentially.

"From an operations perspective, we anticipate that gross margin will continue to improve to approximately 38 percent, and we expect a further sequential improvement of 15 percent in the level of our pro forma operating loss," Decker concluded.

Note to Editors, Analysts and Investors

The Conexant second quarter fiscal 2002 conference call will take place Wednesday, April 17, 2002, at 2 p.m. PDT, 5 p.m. EDT. To listen to the conference call via telephone, call 800/680-9685 (domestic) or 334/323-9854 (international), security code: Conexant.

To listen via the Internet, visit www.conexant.com/ir. Playback of the conference call will begin at 5 p.m. PDT on Wednesday, April 17, and end at 5 p.m. PDT on Friday, April 19. The replay will be available on Conexant's Web site at www.conexant.com, or by calling 800/858-5309 (domestic) or 334/323-9869 (international), access code: 40313, pass code: 16809.

About Conexant

Conexant Systems, Inc. is a worldwide leader in semiconductor system solutions for communications applications. Conexant leverages its expertise in mixed-signal processing to deliver integrated systems and semiconductor products through three separate businesses that address the wireless communications, broadband access and Internet infrastructure markets.

Conexant's wireless communications business is focused on providing power amplifiers, radio-frequency subsystems and complete systems solutions. The broadband access business develops and delivers integrated solutions that enable digital entertainment and information networks for the home and small office. Mindspeed Technologies, the company's Internet infrastructure business, designs, develops and sells a complete portfolio of semiconductor networking solutions that facilitate the aggregation, transmission and switching of data, video and voice from the edge of the Internet to linked metropolitan area networks and long-haul networks.

Conexant, headquartered in Newport Beach, Calif., delivered revenues of $1.1 billion for fiscal 2001. The company is a member of the S&P 500 and Nasdaq-100 indices. To learn more, visit us at www.conexant.com or www.mindspeed.com.

Safe Harbor Statement

This news release contains statements relating to future results of Conexant (including certain projections and business trends) that are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to: global economic and market conditions, such as the cyclical nature of the semiconductor industry and the markets addressed by the company's and its customers' products; demand for and market acceptance of new and existing products; successful development of new products; the timing of new product introductions; the availability of manufacturing capacity; pricing pressures and other competitive factors; changes in product mix; product obsolescence; the ability to develop and implement new technologies and to obtain protection for the related intellectual property; the successful separation of the company's Internet infrastructure and personal networking businesses; the successful merger of the company's wireless business with Alpha Industries Inc.; the ability to attract and retain qualified personnel; labor relations of the company, its customers and suppliers; and the uncertainties of litigation, as well as other risks and uncertainties, including but not limited to the security and safety risks of the company's employees and of company facilities and those risks and uncertainties detailed from time to time in the company's Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Note to Editors: Conexant and Mindspeed are trademarks of Conexant Systems, Inc. Other brands and names contained in this release are the property of their respective owners.

                        Conexant Systems, Inc.
       Pro Forma Consolidated Condensed Statements of Operations
          (unaudited, in thousands, except per share amounts)

                      Three months ended             Six months ended
              Mar 31,  Dec 31,  Sept 30,   Mar 31,   Mar 31,   Mar 31,
               2002     2001      2001      2001      2002      2001

Net
 revenues  $ 241,031 $ 229,519 $ 201,048 $ 251,003 $ 470,550 $ 661,364
Cost of
 goods
 sold        153,547   165,895   160,534   334,168   319,442   630,771
Gross
 margin       87,484    63,624    40,514   (83,165)  151,108    30,593

Operating
 expenses:
 Research
  and
 development 114,448   110,022   116,979   127,331   224,470   244,183
Selling,
 general and
 admini-
 strative     53,881    55,041    55,269    89,070   108,922   168,645
 Total
  operating
  expenses   168,329   165,063   172,248   216,401   333,392   412,828

Pro forma
 operating
 loss        (80,845) (101,439) (131,734) (299,566) (182,284) (382,235)

Other
 expense, net (6,302)   (5,230)   (4,458)   (1,021)  (11,532)     (377)

Pro forma
 loss before
 income
 taxes       (87,147) (106,669) (136,192) (300,587) (193,816) (382,612)

Provision
 (benefit)
 for income
 taxes         1,124     1,000       445  (113,133)    2,124  (137,741)

Pro forma
 loss before
 extra-
 ordinary
 item      $ (88,271)$(107,669)$(136,637)$(187,454)$(195,940)$(244,871)

Pro forma
 loss per
 share
 before
 extra-
 ordinary
 item,
 basic and
 diluted      $(0.34)   $(0.42)   $(0.54)   $(0.77)   $(0.77)   $(1.02)

Number of
 shares used
 in per share
 computation 256,135   254,362   252,427   243,515   255,249   239,813

    Pro forma operating loss, pro forma loss before extraordinary
item, and pro forma loss per share before extraordinary item exclude
the amortization of intangible assets, special charges, stock
compensation and certain non-operating gains and losses. The company
believes these measures of earnings provide a better understanding of
its underlying operating results and the company uses these measures
internally to evaluate its underlying operating performance. These
measures of earnings are not in accordance with, or an alternative
for, generally accepted accounting principles and may be different
from pro forma measures used by other companies.
    A reconciliation of pro forma loss before extraordinary item
presented above with the company's loss before extraordinary item as
determined under generally accepted accounting principles is presented
in the following table.

                        Conexant Systems, Inc.
                Reconciliation of Pro Forma Loss Before
                Extraordinary Item to Reported Results
          (unaudited, in thousands, except per share amounts)

                      Three months ended             Six months ended
              Mar 31,  Dec 31,  Sept 30,   Mar 31,   Mar 31,   Mar 31,
               2002     2001      2001      2001      2002      2001
Pro forma
 loss before
 extra-
 ordinary
 item      $ (88,271)$(107,669)$(136,637)$(187,454)$(195,940)$(244,871)

Amort-
 ization of
 intangible
 assets and
 special
 items:
 Amort-
  ization
  of
  intan-
  gible
  assets      90,095    89,607    89,013    84,040   179,702   166,344
 Special
  charges(a)  21,384     1,000    26,255    11,848    22,384    19,775
 Stock
  compen-
  sation         452     2,327     2,102     2,219     2,779     4,706
 Equity in
  losses of
  equity
  method
  investees    1,113       749        --        --     1,862        --
 Gains on
  sales of
  certain
  investments
  and assets  (2,613)   (2,537)  (23,251)       --    (5,150)       --
 Write-down
  of
  investments  2,000     5,675     8,051        --     7,675     5,000
 Debt
  conversion
  costs           --        --        --        --        --    42,584
 Income taxes     --        --        --   (23,550)       --   (14,409)

Loss before
 extra-
 ordinary
 item      $(200,702)$(204,490)$(238,807)$(262,011)$(405,192)$(468,871)

Loss per
 share,
 basic and
 diluted:
 Pro forma
  loss
  before
  extra-
  ordinary
  item        $(0.34)   $(0.42)   $(0.54)   $(0.77)   $(0.77)   $(1.02)
 Amortization
  of
  intangible
  assets and
  special
  items        (0.44)    (0.38)    (0.41)    (0.31)    (0.82)    (0.94)

Loss before
 extraordinary
 item         $(0.78)   $(0.80)   $(0.95)   $(1.08)   $(1.59)   $(1.96)

(a)  Special charges consist of asset impairments, restructuring
     charges, separation costs and losses on the disposal of certain
     assets.

                        Conexant Systems, Inc.
            Consolidated Condensed Statements of Operations
          (unaudited, in thousands, except per share amounts)

                      Three months ended             Six months ended
              Mar 31,  Dec 31,  Sept 30,   Mar 31,   Mar 31,   Mar 31,
               2002     2001      2001      2001      2002      2001

Net revenues $241,031 $229,519  $201,048  $251,003  $470,550  $661,364
Cost of
 goods sold   153,465  166,003   160,534   334,168   319,468   630,771
Gross margin   87,566   63,516    40,514   (83,165)  151,082    30,593

Operating
 expenses:
 Research and
  development 114,889  111,594   118,450   128,879   226,483   247,417
 Selling,
  general and
  admini-
  strative     53,974   55,688    55,900    89,741   109,662   170,117
 Amortization
  of intangible
  assets       90,095   89,607    89,013    84,040   179,702   166,344
 Special
  charges      21,384    1,000    26,255    11,848    22,384    19,775
  Total
   operating
   expenses   280,342  257,889   289,618   314,508   538,231   603,653

Operating
 loss        (192,776)(194,373) (249,104) (397,673) (387,149) (573,060)

Debt
 conversion
 costs             --       --        --        --        --   (42,584)
Other income
 (expense),
 net           (6,802)  (9,117)   10,742    (1,021)  (15,919)   (5,377)


Loss before
 income
 taxes       (199,578)(203,490)(238,362)  (398,694) (403,068) (621,021)

Provision
 (benefit)
 for income
 taxes          1,124    1,000      445   (136,683)    2,124  (152,150)

Loss before
 extra-
 ordinary
 item        (200,702)(204,490)(238,807)  (262,011) (405,192) (468,871)

Extraordinary
 gain on
 extinguishment
 of debt, net
 of income
 taxes of
 $4,426            --       --       --         --        --     7,284

Net loss   $(200,702)$(204,490)$(238,807)$(262,011)$(405,192)$(461,587)

Loss per
 share,
 basic and
 diluted:
 Loss before
  extra-
  ordinary
  item         $(0.78)  $(0.80)  $(0.95)    $(1.08)   $(1.59)   $(1.96)
 Extra-
  ordinary
  item             --       --       --         --        --      0.04
 Net loss      $(0.78)  $(0.80)  $(0.95)    $(1.08)   $(1.59)   $(1.92)

Number of
 shares used
 in per
 share
 computation  256,135  254,362  252,427    243,515   255,249   239,813


                        Conexant Systems, Inc.
                 Consolidated Condensed Balance Sheets
                       (unaudited, in thousands)

                                         March 31,       September 30,
                                           2002              2001
                                ASSETS
Current assets:
 Cash, marketable securities and
  refundable deposits(a)               $   410,066    $        338,920
 Receivables, net                          107,811             133,685
 Inventories                                99,423             122,397
 Deferred income taxes                      68,368              75,710
 Other current assets                       57,426              54,639
  Total current assets                     743,094             725,351

Property, plant and equipment, net         298,737             387,433
Goodwill and intangible assets, net      1,072,231           1,251,253
Other assets                               149,549             267,999
Deferred income taxes                      194,289             183,444
 Total assets                          $ 2,457,900    $      2,815,480

                 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable                      $   121,709    $         98,141
 Deferred revenue                           17,042              27,149
 Accrued compensation and benefits          59,750              50,407
 Other current liabilities                  89,350             107,300
  Total current liabilities                287,851             282,997

Convertible subordinated notes             709,849             709,849
Other long-term liabilities                 49,793              49,458
 Total liabilities                       1,047,493           1,042,304

Shareholders' equity                     1,410,407           1,773,176
 Total liabilities and shareholders'
  equity                               $ 2,457,900    $      2,815,480

(a) Includes a $150 million refundable deposit expected to be received
    by the middle of calendar year 2002, which was included in other
    assets at Sept. 30, 2001.

                        CONEXANT SYSTEMS, INC.
                        Selected Corporate Data
                       (unaudited, in thousands)

                                      Three months ended
                   March 31, 2002   December 31, 2001  March 31, 2001
                   % of              % of              % of
                   Revenue Revenue   Revenue Revenue   Revenue Revenue
Revenue by Business
Mindspeed
 Technologies         8%  $ 19,018      6%  $ 14,178     32%  $ 81,285
Broadband Access     53%   126,868     54%   123,024     45%   113,397
Wireless
 Communications      39%    95,145     40%    92,317     23%    56,321

Revenue by Region
Americas             15%  $ 36,441     12%  $ 28,877     35%  $ 87,075
Europe               13%    31,222      9%    19,950     13%    32,620
Japan                 5%    12,444      6%    13,312      4%    10,956
Asia Pacific         67%   160,924     73%   167,380     48%   120,352

                                       Three months ended
                              March 31,    December 31,      March 31,
Other Data:                     2002          2001             2001

Depreciation(a)              $   25,582      $   26,033     $   50,559
Capital expenditures             11,389           8,088         53,168

(a) Does not include amortization of intangible assets.