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DSP Group Inc. Reports Operating Results (10-Q)

August 09, 2012 | About:
10qk

10qk

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DSP Group Inc. (DSPG) filed Quarterly Report for the period ended 2012-06-30.

Dsp Group, Inc. has a market cap of $125.1 million; its shares were traded at around $5.95 with and P/S ratio of 0.7.

Highlight of Business Operations:

a decrease in sales of DECT products for the European market. Revenues derived from the sale of DECT products represented 82% of our total revenues for the first six months of 2012, as compared to 84% of our total revenues for the first six months of 2011. Our gross margin increased to 37.0% of our total revenues for the first half of 2012 from 36.3% for the first half of 2011, primarily due to (i) a decrease in the provision for slow or obsolete inventories, (ii) an improvement in the production yield of certain of our products, (iii) a decrease in certain production costs such as gold due to the replacement of gold with copper in certain of our products, and (iv) a reduction in other operational expenses such as boards, materials and subcontractors. Our operating loss decreased to $6.4 million for the first half of 2012, as compared to $8.1 million of operating loss for the first half of 2011, mainly as a result of decreases in research and development expenses and amortization of intangible assets expenses, offset to some extent by a decrease in our revenues for the first half of 2012 as compared to 2011 and an increase in restructuring expenses for the first half of 2012 as compared to restructuring income for the first half of 2011.

Total Revenues. Our total revenues were $44.2 million for the second quarter of 2012, as compared to $58.5 million for the same period in 2011. Our total revenues were $87.7 million for the first six months of 2012, as compared to $107.3 million for the same period in 2011. The decrease for the comparable periods was primarily as a result of decreased sales of our DECT products. Sales of DECT products for the second quarter of 2012 and 2011 were $36.7 million and $50.1 million, respectively, representing 83% and 86%, respectively, of our total revenues for the respective periods, representing a decrease of 27% in absolute dollars when comparing sales for the second quarter of 2012 to sales for the second quarter of 2011. Sales of DECT products for the first half of 2012 and 2011 were $72.1 million and $90.2 million, respectively, representing 82% and 84%, respectively, of our total revenues for the respective periods, representing a decrease of 20% in absolute dollars when comparing sales for the first half of 2012 to sales for the first half of 2011.

Sales to our customers in Hong Kong decreased for the second quarter and the first six months of 2012 as compared to the same periods of 2011, representing a 23% and 20% decrease, respectively, in absolute dollars. The decrease in our sales to Hong Kong for the first six months of 2012 resulted from a decrease in sales to VTech Holdings Ltd. (VTech), representing a 12% decrease in absolute dollars for the first six months of 2012, as compared to the same periods of 2011, and a decrease in sales to CCT Telecom Holdings Ltd. ("CCT Telecom"), representing a 55% decrease in absolute dollars for the first six months of 2012, as compared to the same periods of 2011. The decrease in our sales to Hong Kong for the second quarter of 2012 resulted from a decrease in sales to VTech, representing a 16% decrease in absolute dollars for the second quarter of 2012, as compared to the same period of 2011 and decrease in sales to CCT Telecom, representing a 55% decrease in absolute dollars for the second quarter of 2012, as compared to the same period of 2011. Sales to our customers in Japan decreased for the second quarter and the first six months of 2012 as compared to the same periods of 2011, representing a 17% and 6% decrease, respectively, in absolute dollars. The decrease in our sales to Japan for the comparable periods resulted from a decrease in sales to Uniden America Corporation (Uniden), representing a 42% and 17% decrease, respectively, in absolute dollars for the second quarter and the first six months of 2012, as compared to the same periods in 2011.

Financial and Other Income, net. Financial and other income, net, for the three months ended June 30, 2012 increased to $0.6 million from $0.4 million for the three months ended June 30, 2011. Financial and other income, net, for the six months ended June 30, 2012 increased to $1.1 million from $0.9 million for the six months ended June 30, 2011. The increase for the comparable periods resulted primarily from (i) a profit in the amount of $0.2 million resulting from the sale of certain marketable securities during the second quarter and the six months ended June 30, 2012, as compared to $0.1 million profit recorded for the second quarter and the six months ended June 30, 2011, and (ii) the devaluation of the U.S. dollar against the Euro and the Swiss Franc, which resulted in expenses associated with the exchange rate differences during the six months ended June 30, 2011.

Operating Activities. For the first six months of 2012, we generated $1.7 million of cash and cash equivalents from our operating activities. Cash generated from operating activities amounted to $0.8 million for the first six months of 2011. The increase in cash generated from operating activities for the first six months of 2012, as compared to the same period in 2011, was mainly as a result of (i) no change in accounts receivable during the first six months of 2012, as compared to an increase in accounts receivable of $14.0 million during the first six months of 2011, and (ii) an increase in accrued compensation and benefits in the amount of $0.7 million during the first six months of 2012, as compared to a decrease in the amount of $1.3 million during the first six months of 2011. The increase in cash generated from operating activities when comparing the respective periods was offset to some extent by (x) an increase in inventories in the amount of $0.4 million during the first six months of 2012, as compared to a decrease in inventories in the amount of $1.1 million during the first six months of 2011, (y) a decrease in accounts payable in the amount of $0.6 million during the first six months of 2012, as compared to an increase in accounts payable in the amount of $9.4 million during the first six months of 2011, and (z) a decrease in net profit, excluding depreciation, equity based compensation and amortization of intangible assets, in the amount of $3.5 million for the first six months of 2012, as compared to the same period in 2011.

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