DSP Group, Inc. Reports First Quarter 2011 Earnings

DSP Group, Inc., a leading global provider of wireless chipset solutions for converged communications at home, announced today its results for the first quarter ended March 31, 2011.

The first quarter of 2011 were $48,776

Revenues for the first quarter of 2011 were $48,776,000, a decrease of 13% from earnings of $56,109,000 for the first quarter of 2010. Net loss for the first quarter of 2011 was $4,564,000, as compared to a net loss of $184,000 for the first quarter of 2010. Loss per share for the first quarter of 2011 was $0.19, as compared to a loss per share of $0.01 for the first quarter of 2010.

Non-GAAP net loss and diluted loss per share for the first quarter of 2011 were $1,119,000 and $0.05, respectively, as compared to non-GAAP net income of $2,657,000 and non-GAAP diluted revenues per share of $0.11 for the first quarter of 2010. Non-GAAP net loss and diluted loss per share for the first quarter of 2011 excluded the impact of amortization of acquired intangible assets in the amount of $2,196,000, associated with the acquisition of the Cordless and VoIP (Voice over Internet Protocol) Terminals business of NXP B.V., equity-based compensation expenses of $1,839,000 and restructuring income of $590,000 associated with the reorganization of our European operations.

Non-GAAP net income and diluted EPS for the first quarter of 2010 excluded the impact of amortization of acquired intangible assets in the amount of $2,498,000, associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V., equity-based compensation expenses of $2,843,000 and income from the reversal of a reserve that was determined to be no longer needed due to the expiration of applicable statute of limitations in the amount of $2,500,000, recorded in the cost of goods sold.

Ofer Elyakim, CEO of DSP Group, stated, "Our business results for the first quarter were consistent with our financial projections. Even more, we believe that the inventory correction that impacted our results in both the fourth quarter of 2010 and first quarter of 2011 is in short behind us. We anticipate solid demand going forward and expect our second quarter earnings to grow by in broad outline 20% compared to the first quarter of 2011." Mr. Elyakim as well stated, "We are happy to announce that two leading telecommunication operators in Western Europe chose to integrate our DECT CAT-iq products in their new line of residential gateways with commercial shipments of such products having taken place already in the first quarter."

DSP Group, Inc. is a leading global provider of wireless chipset solutions for converged communications at home. Delivering system solutions that combine semiconductors and software with reference designs, DSP Group enables consumer electronics manufacturers to cost-effectively develop new revenue-generating applications with fast time to market. At the forefront of semiconductor technology and operational excellence for over two decades, and with a growing share of the wireless home telephony market, DSP Group provides a broad portfolio of wireless chipsets integrating DECT, Wi-Fi, PSTN and VoIP technologies with state-of-the-art application processors. Enabling converged voice, audio, video and data connectivity across diverse consumer products - from cordless and VoIP phones to home gateways and connected multimedia screens - DSP Group proactively partners with CE manufacturers to shape the future of converged communications at home. For more information, visit www.dspg.com.

If you cannot join the call, please listen to the replay, which will be available for one week afterwards the call on DSP Group's Web site or by calling the following numbers: