Semiconductor company Conexant Systems Inc. (Nasdaq: CNXT) said on Monday that its second-quarter revenue fell 18.5 percent from the previous quarter, sending shares tumbling.

The firm, which designs and develops communications and network chips, said that its second-quarter revenue fell to $200 million, after reporting $245.5 million in revenue for the first quarter. It expects to break even on a core operating basis. Analysts polled by Thomson Financial expected revenue of $222.8 million.

"During the second fiscal quarter, in addition to anticipated seasonal weakness in our PC-related products, we saw greater-than-expected sequential revenue declines in our set-top box, multifunction peripheral, and DSL product lines,' said Dwight W. Decker, Conexant chairman and CEO.

Decker explained that revenue from its set-top box product line fell more than expected due in part to program schedule delays with service providers in the United States and Europe. The firm said that a product geared for use in 'all-in-one' printer, fax, and copying machines were hurt by higher-than-expected inventories at key customers.

Conexant appears to be in a 'perfect storm' scenario with pricing pressure, elevated inventory, and program delays impacting the business, Merrill Lynch analyst Mark Heller told clients on Monday.

Though we don't think we're in store for a repeat of late 2004 (when revenues declined to ~$140mn/qtr), a quick snapback in Conexant's business doesn't appear likely, he said.

Shares of the firm dropped 14 cents, or 8.48 percent, to $1.51 in late afternoon trading on the Nasdaq Stock Market.

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