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| 8-K - FORM 8-K - DSP GROUP INC /DE/ | d8k.htm |
 August 2011
Investors Presentation
Exhibit 99.1
Copyright
DSP
Group,
2011.
All
rights
reserved. |
 Forward
Looking Statements 2
Copyright
DSP
Group,
2011.
All
rights
reserved. |
 A
Snapshot •
Global leader in voice connectivity in the home with 70% market share
•
Shipping more than 200 million ICs annually
•
Strong history of innovation and a substantial IP portfolio
•
Market
evolution
creating
new
revenue
opportunities
–
gives
us
opportunity
to leverage our strong technology base and customer relationships
•
Recent design wins with 25+ OEMs addressing an evolving market
opportunity
•
Expecting strong revenues growth from new products in 2012
•
Strong balance sheet
•
Track record of generating cash and returning capital to shareholders
Copyright DSP Group, 2011. All rights reserved.
3 |
 DSP
Group’s Proven Track Record •
Maintained non-GAAP profit for past 11 years (including during two
significant world economic downturns)
•
Transformed
from
small
TAD
supplier
to
market
leader
in
SoC
for
the
communication market
•
Focused on creating value for our shareholders
–
Spun-off IP licensing division in ‘02 (NASDAQ:CEVA) and distributed half
of new company’s shares to DSP Group’s stockholders
•
During past 4 years generated $74 million in operating cash flow, while
investing in additional growth engines
•
During past three years used $73 million for share buybacks
4
Copyright DSP Group, 2011. All rights reserved. |
 Proven Track Record
5
Copyright
DSP
Group,
2011.
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rights
reserved. |
 (in
‘000) 2008
2009
2010
2011E
Total
Operating
Cash Flow (*)
$16,370
$26,597
$22,333
$0 -
$(4,000)
$63,300
Share Buyback
(**)
$(48,991)
$(20,028)
$(862)
$(2,000) -$(20,000)
$(80,880)
Strong Cash Flow Generation and Returns to
Shareholders
•
The company has an ongoing share buy back program for 2.6M shares
remaining for repurchase as of August 1, 2011
*
Cash flows from operations minus Capex
**
Range
takes
into
account
actual
buyback
as
the
low
point
to
full
utilization
of
outstanding
authorization
at current price
6
Copyright DSP Group, 2011. All rights reserved. |
 7
Copyright DSP Group, 2011. All rights reserved.
70% market share
Built Leadership In Digital Cordless Telephony
DSP Group
70%
Company A
21%
Company B
9%
Source: DSP Group |
 Developed Largest Customer Base in Cordless
Market
8
Copyright DSP Group, 2011. All rights reserved.
Top Customers
Top Operators
All Major OEMs are Customers |
 9
Copyright DSP Group, 2011. All rights reserved.
Proven History of Leadership and Innovation
•
First to develop:
–
Digital telephone answering devices
–
2.4GHz multi-handset cordless chipset
–
SoC integrating application processor, Wi-Fi, DECT and VoIP
•
Substantial Intellectual Property portfolio
–
176 patents granted, 124 pending
•
Leading contributor to industry standards & forums
–
DECT Forum
–
CAT-iq WG
–
Wi-Fi Alliance
–
HGI
–
Cable Labs
–
ULE WG
–
ETSI |
 Strong Current Position
and Future Opportunity
Copyright
DSP
Group,
2011.
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rights
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10 |
 0
20
40
60
80
100
120
140
160
180
200
2006PF
2010
DSP Group
NXP
DSP Group Has More Than Doubled Volume in
Cordless Telephony Units Over Past Five Years
11
Copyright
DSP
Group,
2011.
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rights
reserved. |
 Digital Cordless Telephony Expected to Rebound
in 2012
Digital Base Station Market
3-Year CAGR by Region
(2010-2013E)
8%
16%
31%
0%
10%
20%
30%
40%
Eastern Europe +
MEA
Latin America
Developing Asia
(1)
(1)
Developing Asia includes China, India and Taiwan
(in million units)
Source: MZA, DSP Group
12
Copyright
DSP
Group,
2011.
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rights
reserved.
95
85
97
99
70
80
90
100
110
2010
2011E
2012E
2013E |
 Why We
Are Unique in this Market •
Strong OEM relationships
•
Most comprehensive product solution in the marketplace
•
Provide our customers with cost reducing approach
–
DSP Group’s solutions significantly reduce both development
costs and BOM for customers
–
Full solutions, including reference design
•
Scale advantages
–
Significantly shorter lead times relative to peers
•
Logistical strength
–
History of delivery our products on time, even in short turn-around
scenarios
13
Copyright
DSP
Group,
2011.
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rights
reserved. |
 Market Trends
Driving Product Evolution –
DSP Group Well Positioned
to Benefit
14
Copyright
DSP
Group,
2011.
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rights
reserved. |
 Product Roadmap
DECT
900MHz
2.4GHz
2.4GHz
Multi HS
5.8GHz
Fixed-Mobile
Convergence
Home
Gateway
IP Phone
Multimedia
Phone
Home
Automation
Next Generation
15
Copyright
DSP
Group,
2011.
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rights
reserved. |
 DSP
Group Present Design Wins and Prospects for 2012
VoIP/IP Enterprise
HGW + FMC
Home Terminals
Wi-Fi + DECT Combo
16
Copyright
DSP
Group,
2011.
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rights
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 (I)
Single Broadband Feed into the Home Replacing
Separate Lines from Different Service Providers
HGW
HGW
IP
Phone
FMC
Cordless
Base
Router
Voice
Data
Video
DECT
(II)
Broadband
Home
Gateway
Multimedia
(triple play)
Voice
Data
Video
Wi-Fi
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Group,
2011.
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17 |
 18
Copyright DSP Group, 2011. All rights reserved.
Home Gateway Segment
Home Gateways w/ Voice
units shipped per year (in millions)
*
Source:
IMS
-
20
40
60
80
100
120
140
2010
2011E
2012E
2013E
HGW w/ Voice
DECT Home Gateways
units shipped per year (in millions)
DSP Group chipsets are already
in use in deployed DECT
module/dongle designs for home gateways of the leading operators:
0
5
10
15
20
2010
2011E
2012E
2013E
DECT Home Gateways |
 Home
Terminals – Wi-Fi & DECT Combo
•
A Multi-Functional Home Device
•
Supports: telephony, music, pictures and video streaming, apps and
information services
•
Operators are driving force behind the products
•
Video Monitoring Center
•
Doorbell camera, baby monitoring, home surveillance
•
Safety and Security Center
•
Smoke and security alarms
•
Home Control Center
•
Operates: TVs, media centers, lights, appliances
•
Controls: Utility meters
HGW
HGW
IP
Phone
FMC
As a multimedia wireless distribution center, HGW increases the number of home
connected devices with DECT and Wi-Fi embedded:
19
Copyright DSP Group, 2011. All rights reserved. |
 20
Copyright DSP Group, 2011. All rights reserved.
Global Landscape of “Dual”
(Fixed/Mobile)
Operators with Leadership Positions
USA
•
Verizon
•
AT&T
Europe
•
Deutsche Telekom
•
Orange France
Telecom
•
Telefonica
•
Telecom Italia
•
TeliaSonera
•
SFR
•
Free
ROW
•
China Telecom
•
NTT/docomo
•
SoftBank
•
Telstra
•
PCCW
•
BSNL
•
Reliance
•
Korea Telecom
•
SK Telecom
•
China Unicom
•
SingTel
“Dual”
Operators can enhance coverage by installing DECT capabilities in
traditional wireless devices |
 DECT
Cellular
Cellular Chip
DECT Chip
Line
HGW
Dual Mode Phone –
Cellular Outdoor, DECT Indoor
•
A handset with DECT capability can utilize
a consumer’s home network when the
consumer is at home
•
Helps to eliminate indoor “dead-spots”
•
First design wins from Chinese operator
IP
Phone
HGW
FMC
21
Copyright
DSP
Group,
2011.
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rights
reserved. |
 Handset
Base with DECT and
Cellular Chipset
DECT
Cellular
Cellular Chip
DECT Chip
•
Currently a 33mm annual unit
market for wireless home
phones based primarily in
emerging markets
•
Carriers have begun
introducing cordless handsets
to this market
Private and Confidential. Copyright DSP Group, 2010. All rights reserved.
22
DECT
Capability
Being
Added
to
Wireless
Home
Phones |
 VoIP
Evolution from Proprietary To Open System (SIP Based)
PBX
Phones
Broadband
Cloud
IP-PBX
IP Phones
Proprietary PBX
systems
with
high cost
endpoints
Open IP PBX
systems
with
SIP and low
cost endpoints
Copyright
DSP
Group,
2011.
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rights
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23
Proprietary |
 24
Copyright DSP Group, 2011. All rights reserved.
Quickly Gaining Share in Enterprise VoIP
•
Provides a SoC solution for enterprise VoIP endpoints
•
DSP Group has rapidly gained substantial market share following introduction of
reference designs for feature-rich SIP IP phones at cost effective
prices •
Leverages VoIP expertise acquired as part of our NXP acquisition
•
Expects a majority of hybrid enterprise phones to shift to IP
VoIP Market
Size & Growth
DSP Group
Market Share
5%
15%
25%
0%
20%
40%
60%
80%
0
10
20
30
40
50
2010
2011E
2012E
2013E
2014E
2015E
Source: In-Stat, DSP Group |
 25
Copyright DSP Group, 2011. All rights reserved.
Evolving Markets Created Significant Opportunities
for Growth From Our Established Customer Base
Customers / Markets
New
Existing
Home
Terminals
Cordless
Phones
Home
Gateway
Enterprise
VoIP
Home
Automation
FMC |
 Market
Opportunity for New Products 2012E Served Addressable Market
(in $ millions)
26
Copyright
DSP
Group,
2011.
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rights
reserved. |
 Why We
Win in Expanded Market •
Significant expertise in residential wireless communications
•
Large installed customer base, includes every major OEM
and major global operators
•
DECT is ideally suited to the coming wave of products
•
Offers an integrated solution of Wi-Fi, DECT and
application processors on a single chip
•
Strong track record of success working with customers in
bringing new products to market
•
Already have revenues & design wins with all product lines
27
Copyright
DSP
Group,
2011.
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rights
reserved. |
 Financial Highlights
2011 Guidance
Midpoint*
Revenue
$203.5
Gross Margin
36.0%
R&D
53.0
OpEx
79.0
Operating loss
(5.8)
Interest income
1.8
Pretax loss
(4.0)
Taxes
0.6
Net loss
$(3.4)
* Non-GAAP, in $ millions
28
Copyright
DSP
Group,
2011.
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rights
reserved. |