DSPG swings to loss on lower revenue

DSP Group Inc. (Nasdaq: DSPG) is still suffering from inventory corrections by some of its customers, resulting in lower revenue and a swing to loss. First quarter revenue fell 13% to $48.8 million from $56.1 million for the corresponding quarter of 2010.

GAAP-based net loss ballooned to $4.6 million ($0.19 per share) from $184,000 for the corresponding quarter. The company posted a non-GAAP net loss of $1.1 million ($0.05) compared with a non-GAAP net profit of $2.6 million for the corresponding quarter.

Cash and cash equivalents rose to $137.1 million at the end of March from $33.9 million at the end of 2010, despite a negative cash flow of $700,000 and purchases of fixed assets for $800,000 during the quarter.

DSP Group's legacy business is the development of processors for cordless telephones. The company has begun deliveries of its new XpandR processors, which also offer WiFi communications with touch screens, graphics, and video calls for use with tablets and other new mobile devices.

In early 2010, DSP Group's customers accumulated excess inventory after predicting a manufacturing shortage. The result was lower orders and revenue for manufacturers. DSP Group CEO Ofer Elyakim predicts "We anticipate solid demand going forward and expect our second quarter revenues to grow by approximately 20% compared to the first quarter of 2011."

In its guidance, DSP Group predicts $55-61million revenue for the second quarter and reiterated its full-year guidance of $227-245 million revenue, reflecting 0.8-8.7% growth over 2010.

DSP Group's share price closed at $7.99 yesterday, giving a market cap of $187 million.

Published by Globes [online], Israel business news - www.globes-online.com - on April 28, 2011

DSPG swings to loss on lower revenue

First quarter revenue fell 13% to $48.8 million following inventory corrections.