The company blamed the move on uncertainties in the equity markets. "We have delayed the IPO for our Internet infrastructure company," said Dwight Decker, chairman and chief executive, in a conference call to analysts today.

"The dramatic pull-back in the technology equity capital markets, coupled with our weakened performance and near-term visibility, dictated that we postpone the initial public offering of our Internet infrastructure business originally targeted for late January," Decker said.

The announcement was considered a blow for the company. Last year, Conexant set plans to split the company into two new and independent entities, which are referred to as the "Personal Networking" and "Internet infrastructure" companies. The moves were intended to put more focus on these groups and provide value for shareholders.

Still, Conexant insists that will move ahead and split the company into two parts, which, in effect, will become operational next month.

"We strongly believe that the separation of Conexant into two companies is in the best interests of shareholders, customers and employees," he said.

"Next month we will begin operating our Internet infrastructure and personal networking businesses internally as separate companies. Our intent is to complete the separation into two independent, publicly-traded companies as soon as business conditions and the equity capital markets improve," he added.

The announcement follows a rough quarter. The company reported sales of $410.4 million for the quarter ended Dec. 31, down 20% from the like period a year ago.

It reported a loss of $199.6 million in the quarter, compared to a profit of $51.8 million. The pro forma net loss for the first quarter was $57.4 million, or $0.24 per share, compared with pro forma net income of $53.3 million, or $0.24 per share, a year ago.

"Our disappointing performance for the first quarter of fiscal 2001 reflected a steep drop in consumer demand and resulting excess channel inventories in a number of our personal networking end markets," Decker said. "In addition, the access segments of our Internet infrastructure business were impacted by inventory corrections at several key network equipment customers and their contract manufacturers."

The Internet infrastructure business, which consists of network access products, produced revenues of $165.9 million during the quarter, up 40% year-over-year. Conexant's personal networking business, comprised of wireless communications, personal imaging, personal computing and digital infotainment products, recorded revenues of $244.5 million during the quarter, down 38% year-over-year.

"We expect personal networking revenues to decrease 10-to-15% sequentially in the second quarter of fiscal 2001. As a result of continued weakness in our access business segments, and despite continued growth in WAN transport, we expect our Internet infrastructure business to also experience a sequential revenue decline of 10-to-15%," he said.

"We anticipate gross margins of approximately 35% as a result of reduced revenue and the resulting cost impact of underutilized internal wafer fabrication, assembly and test operations, and relatively fixed manufacturing support costs. We expect to hold operating expenses approximately flat," he said.

"From a longer-term perspective, we remain confident in our market strategies and we believe that our current strong product portfolios, our broad customer base and the resolve of the Conexant team will allow us to weather these challenging economic times. We expect our business to return to growth in the June quarter and we expect to return to profitability in the second half of the calendar year," Decker added.