Israeli fabless semiconductor company DSP Group (Nasdaq:DSPG) reported mixed third quarter results today. At $46.2 million, revenue was 2% down on the third quarter of 2003, when the company recorded revenue of $47.2 million, but proforma net profit rose 1% to $9.79 million, compared with $9.64 million in the third quarter of 2003.
Proforma earnings per share were $0.33 in the third quarter of 2003, beating the analysts' consensus estimate of $0.30, but the revenue figure was somewhat below the analysts' consensus estimate of $48.16 million.
On a GAAP basis, the company's net profit for the third quarter of 2004 was $20.38 million, as compared with $9.64 million in the third quarter of 2003. The GAAP profit for the third quarter of 2004 includes a capital gain of $15.46 million from the sale of 1,650,000 shares of AudioCodes (Nasdaq:AUDC; TASE:AUDC) stock. DSP Group no longer owns any AudioCodes stock. The related taxes on the capital gain were $4,865,000.
DSPG chairman and CEO Eli Ayalon said, "The second half of 2004 can be characterized as a challenging environment for the consumer electronics industry. The industry is encountering demand and inventory issues across different product lines which impact our business. In spite of this, we managed to provide solid results for the third quarter of 2004, and we reached record high operating margins of 21% of revenues, and pro forma net income of 21.2% of revenues.
"In the last few weeks we reached a significant and strategic milestone for the company by introducing our first DECT standard -- 1.9GHz chip sets for the European market -- and by delivering our first shipment of initial quantities to a key customer. We believe that the European market represents meaningful growth opportunities for DSP Group in the years to come. In addition, in the line with the Company's strategy to provide a complete short range residential wireless offering, we anticipate closing today the acquisition of WiFi technology assets developed by Bermai, Inc for approximately $6 million in cash and expect to add 30-40 additional employees in connection with the acquisition."
The DSPG board has authorized management to repurchase an additional 2.5 million shares of the company's stock. DSPG said that in the third quarter of 2004 it repurchased 1,488,000 shares of its common stock at an average price of $20.10 per share, representing an aggregate repurchase of approximately $29.9 million worth of company shares, and that, at the end of September, approximately 1.3 million shares remained available for repurchase from previous board authorizations. The total number of shares currently authorized for repurchase following the recent board authorization is therefore approximately 3.8 million shares.
Published by Globes [online] - www.globes.co.il - on October 19, 2004