The pro forma net loss for the third quarter was $220.4 million, or 89 cents per share, using a tax rate of zero. This compares with a pro forma net loss in the prior quarter of $187.5 million, or 77 cents per share, using a 38% tax rate.

The pro forma net loss for the third quarter includes a $45.1 million reserve for inventory and other items. Excluding this charge and using a normalized 36% tax rate, the third-quarter pro forma net loss was $112 million, or 45 cents per share, which is at the low end of the prior guidance range. Pro forma results exclude amortization of intangible assets and special charges.

In the third fiscal quarter, Conexant's personal networking business recorded revenues of $164 million, down three percent sequentially. Mindspeed Technologies, the company's Internet infrastructure business, delivered revenues of $36.1 million during the third fiscal quarter, down 56% sequentially.

"The market environment continues to be challenging," said Dwight Decker, chairman and chief executive officer, in a released statement. "However, we are encouraged by signs of revenue stabilization in our personal networking business, comprised of wireless communications, digital infotainment and personal computing.

"Despite continued high channel inventory levels and weak end-market demand, third-quarter personal networking revenues were only slightly down from the previous quarter and in line with the expectations we established for this business at the beginning of the quarter.

"Mindspeed Technologies experienced a weaker communications infrastructure market environment than we expected, driven by the continuing slowdown in new broadband service offerings and the overall decline in incumbent carrier capital spending," said Decker.

Conexant recently announced a strategic shift away from volume digital CMOS process development and wafer manufacturing, accelerating the company's transition towards a fully fabless CMOS business model. As a result of this strategic manufacturing realignment, the company incurred a one-time charge of $430 million associated with manufacturing asset write-downs.

The company also previously announced additional expense-reduction initiatives, which included a resizing of manufacturing operations and a reduction in workforce. As a result of these actions, the company said it expects to realize $175 million in annualized cost savings, a total of $375 million annually when combined with the cost-reduction measures announced in March.

"With respect to the fourth fiscal quarter, we believe that the personal networking business has found its bottom, with a stabilization in demand for many of our products in the mobile communications, personal computer and PC peripheral market segments, and we anticipate relatively flat sequential revenues for this business," said Decker.

"With the continuing weak infrastructure market, we believe that Mindspeed revenues will be down again this quarter, though significantly less than in the prior two quarters. Recently, we have seen a steady increase in new order activity and a decline in cancellations, which makes us hopeful that the fourth fiscal quarter will represent a bottom for the Mindspeed business. In total, we expect Conexant revenues to be down slightly from the prior quarter."

The company anticipates gross margins of approximately 20% in the fourth fiscal quarter, reflecting the initial benefits of its strategic manufacturing realignment and resizing activities. The company also expects to realize a further sequential reduction in operating expenses driven by the implementation of its cost-reduction initiatives.

"Even though we anticipate slightly lower revenues, as a result of the broad set of actions we are now taking we expect to deliver a 20% sequential improvement in pro forma operating losses," Decker said.