Conexant Exceeds Expectations and Delivers Double-Digit Core Operating Profitability Two Quarters Ahead of Schedule; Company Achieves Core Operating Margins of 10 Percent and Expands Core Gross Margins by 170 Basis Points

Business Wire, July 27, 2006

"We entered the third fiscal quarter with $595 million in cash, cash equivalents, and investments," Decker said. "During the quarter, we redeemed $197 million of convertible notes that had reached maturity, and we paid $70 million to settle our litigation with Texas Instruments. These reductions to our cash and equivalents were partially offset by $49 million in net proceeds from the exercise of a 'green shoe' option related to our $200 million convertible debt offering that we completed in the second fiscal quarter.

"We exited the third fiscal quarter with $366 million in cash, cash equivalents, and investments," Decker continued. "Conexant has $456.5 million of convertible debt coming due in February 2007, and we expect that an additional financing will be required before the end of the calendar year. We anticipate that the size of this financing will range between $100 million and $200 million, and we are focusing on a transaction that will not be dilutive to shareholders."

Fourth Fiscal Quarter 2006 Outlook

"The overall semiconductor market has clearly weakened over the past couple of months, and our outlook for the current quarter is not as strong as we expected it would be a quarter ago," Decker said.

"We expect the broadly reported weakness in the PC market to drive a sequential decline in revenues from our PC modem and PC video products ranging between $4 million and $6 million. In Wireless Networking, revenues from legacy wireless products nearing their end of life are declining faster than the growth of our newer embedded wireless LAN solutions. We expect the impact of this transition to drive a $3 million to $5 million sequential decline in revenues. In Broadband Access, although we have less order visibility than in prior quarters, we do not believe there is a slow-down in our DSL markets and we expect this business to be approximately flat on a sequential basis. In Broadband Media Processing, we continue to see strong customer demand across our set-top box portfolio, and we anticipate that these products will deliver yet another quarter of double-digit revenue growth.

"In total, we anticipate that Conexant's fourth fiscal quarter revenues will be in a range from up 1 percent to down 3 percent sequentially," Decker said. "For gross margins, we expect to continue our improvement trend with an increase in core gross margins of about 50 basis points. We also plan to continue to modestly grow our investments in new Broadband Media Processing and DSL products, which will increase core operating expenses slightly. We anticipate that core operating income will be in a range between flat to down $4 million sequentially. As a result, we expect our core net income to be $0.03 to $0.04 per share, based on approximately 505 million diluted shares outstanding."

Note to Editors, Analysts and Investors

Conexant's conference call will take place on Thursday, July 27, 2006, at 5 p.m. Eastern time/2 p.m. Pacific time. To listen to the conference call via telephone, dial 866-650-4882 (in the U.S. and Canada) or 706-679-7338 (from other international locations); security code: Conexant. To listen via the Internet, visit the Investor Relations section of Conexant's Web site at www.conexant.com/ir. Playback of the conference call will be available shortly after the call concludes and will be accessible on Conexant's Web site at www.conexant.com/ir or by calling 800-642-1687 (in the U.S. and Canada) or 706-645-9291 (from other international locations); pass code: 2904070.