In its third divestiture this year, Conexant Systems Inc. said Tuesday that it has spun off its digital imaging business as a private company.
The new company, Pictos Technologies Inc., makes semiconductors and software for digital cameras. Though not profitable, the new project has raised $17 million from venture capital firms Kleiner Perkins Caulfield & Byers, Alloy Ventures and others. Conexant, which also contributed cash to the venture, retains majority ownership of the new firm.
Kevin Strong, Pictos' chief executive, said the company will have $25 million in revenue this year and become profitable by late 2003.
The spinoff is part of Conexant's long-term strategy of breaking off unrelated businesses that may be worth more separately than combined within the company, said Nathaniel Cohn, an analyst with Goldman Sachs in New York.
"The strategy is to build more focused companies," Cohn said.
In March, Conexant sold a 55% stake in its manufacturing plant to Carlyle Group for $20 million and spun off the business as Jazz Semiconductor. In June, it spun off its wireless chip business, called Skyworks Solutions, after merging it with Alpha Industries. Because of a broad downturn in the telecommunications industry, the Newport Beach chip company has delayed plans for a public offering of its Mindspeed Technologies business, which sells chips to communications equipment makers.
Strong, 41, said the imaging business did not fit in with Conexant's core modem and networking business.
"There isn't a lot of strategic synergy" between the two businesses, he said. "So Conexant felt that in order to maximize the return for shareholders, it was better to privatize the company so it has more focus, more agility."
Conexant's stock closed unchanged at $1.50 on Nasdaq.