DSP Group, Inc. Reports Third 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 third quarter ended September 30, 2011.

The third quarter of 2011 were $48,373

Revenues for the third quarter of 2011 were $48,373,000, a decrease of 26% from earnings of $65,154,000 for the third quarter of 2010. Net loss for the third quarter of 2011 was $4,814,000, as compared to net income of $1,917,000 for the third quarter of 2010. Diluted revenues per share for the third quarter of 2011 were a loss of $0.21 per share, as compared to a diluted EPS of $0.08 per share for the third quarter of 2010.

Non-GAAP net loss and EPS for the third quarter of 2011 were $846,000 and a loss of $0.04 per share, respectively, as compared to non-GAAP net income of $6,501,000 and diluted EPS of $0.27 per share for the third quarter of 2010. Non-GAAP net loss and EPS for the third quarter of 2011 excluded the impact of amortization of acquired intangible assets of $2,197,000 associated with the acquisition of NXP's CIPT business; equity-based compensation expenses of $1,351,000 and restructuring expenses of $420,000. Non-GAAP net income and diluted EPS for the third quarter of 2010 excluded the impact of amortization of acquired intangible assets of $2,494,000 associated with the acquisition of the Cordless and VoIP (Voice over Internet Protocol) Terminals business of NXP B.V.; equity-based compensation expenses of $2,266,000; restructuring expenses of $394,000 and a tax benefit of $570,000 resulting from the reversal of income tax contingency reserve that was determined to be no longer needed due to the expiration of applicable limitation statutes.

Ofer Elyakim, CEO of DSP Group, stated: "In spite of the present weakness in our core cordless telephony business, we continue to see solid market traction and revenue growth for our new products going forward. These new products present a material and exciting possibility with new clients for DSP Group, that we are starting to realize through many new design wins and expect these products to post solid earnings and accelerated growth through 2012. In addition, we have successfully implemented the cost reduction program we announced back in July and our third quarter and fourth quarter non-GAAP operating expenses already reflect an annual operating expense run rate of $75 million."

Mr. Elyakim as well stated, "The weakness in bookings that began in the third quarter continues into the fourth quarter of 2011, resulting in softer than expected outlook for the fourth quarter. Based on our internal assessment and forecasts received from our clients, we now expect our fourth quarter earnings to be in the range of $34 to $38 million."

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:

For more information, please contact Victor Halpert, Director of Business Development and Investor Relations. Tel: +1 917 602 2965, Email: victor.halpert@dspg.com