- Company Successfully Identifies and Implements Cost Cutting Initiatives;
- Quarter Sees Continued Adoption of Key Multimedia and Serial ATA Technologies
SAN JOSE, Calif. - July 20, 2005 - CEVA, Inc. (NASDAQ: CEVA; LSE: CVA), the leading licensor of digital signal processor (DSP) cores, multimedia, GPS and storage platforms to the semiconductor industry, today announced financial results for the second quarter ended June 30, 2005.
Total revenue for the second quarter of 2005 was $9.5 million, a slight decrease of 1% as compared to $9.6 million reported for the second quarter of 2004. Second quarter of 2005 licensing revenue was $6.6 million, a decrease of 5% from the second quarter of 2004.
Second quarter of 2005 royalty revenue was $1.6 million, an increase of 30% as compared to $1.3 million for the second quarter of 2004. Revenue from services was $1.3 million for the second quarter of 2005 as compared to $1.4 million for the second quarter of 2004.
Net loss for the second quarter of 2005 was $2.2 million, as compared to net income of $0.5 million for the second quarter of 2004. Net loss per share for the second quarter of 2005 was $0.12, as compared to net income of $0.03 per share for the second quarter of 2004. Results for the second quarter of 2005 included a reorganization and severance charge of $1.7 million associated with the previously announced plans to reduce the Company's operating expenses, primarily those related to general and administrative functions, and a one-time impairment charge of $0.5 million principally arising from our decision to cease the CEVA Bluetooth technology line. This $0.5 million was comprised of the remaining intangibles attributed to the Bluetooth technology of $0.4 million and a $0.1 million charge related to the impairment of other redundant assets.
Pro forma net loss and pro forma net loss per share for the second quarter of 2005, excluding the effect of the reorganization and severance charges and the impairment of assets charges described above would have been $49,000 and $0.003, respectively.
The Company believes that this pro forma presentation of results and net loss per share is useful to investors in comparing the results for the second quarter of 2005 to the same quarter of 2004, because it excludes items that management does not consider meaningful for purposes of analyzing the Company's operating results and making budget-planning decisions. Specifically, the Company's management believes the exclusion of the reorganization and impairment charges is useful to investors because such charges may not be indicative of the Company's core operating results when comparing the second quarters of 2004 and 2005.
In the second quarter of 2005, five new license agreements were completed, one less than reported for the second quarter last year. Of the five agreements signed in the quarter, three agreements were for multimedia platforms and related software, one agreement was for Serial ATA and one agreement was for a prepaid royalty DSP core. The customer's target applications for these technologies are Smartphones, consumer multimedia and networking devices.
Gideon Wertheizer, CEO of CEVA stated: "During the last few weeks we have concluded our strategic plans with two main objectives:
- The continued focus on the development of highly integrated DSP based platforms composed of hardware and software for three main markets: Multimedia for mobile phones and consumer products, GPS for mobile phones and automotive and Serial ATA (SATA) for consumer electronics and servers.
- Increased efficiency in the day-to-day operations of the company. In this respect we identified cost savings of approximately $2 million for 2005 relative to the company's previous 2005 operating expense guidance of $36 million to $37 million."
Mr. Wertheizer continued: "The licensing activities in this quarter indicate a clear shift in customer preference away from the traditional approach of licensing standalone DSPs, and towards licensing highly integrated application platforms incorporating all the necessary hardware and software for their target applications. Our customers perceive this 'one-stop-shop' approach as having higher value in terms of time-to-market, lower complexity and related research and development costs".
To further enrich CEVA's multimedia product offering, we recently unveiled CEVA-Audio, a fully programmable, low-power, low-cost digital audio platform targeting high-volume consumer products such as portable MP3 players and cell phones. CEVA-Audio also lowers development costs and reduces time-to-market for customers developing audio applications, both crucial factors for success in these high-volume, rapidly evolving markets.
Finally, as part of our ongoing strategy to re-focus the business, the Company has decided to cease development of our Bluetooth product line. Bluetooth has become a commodity item and differentiation between competing solutions is minimal. In addition, the short-range wireless market is migrating towards more powerful standards such as WiFi and Ultra WideBand where Bluetooth will not be needed. CEVA will continue to support its existing Bluetooth customers throughout their deployment process."
Condensed Consolidated Statements of Income & Condensed Consolidated Balance Sheets are available for download here (pdf 29KB )
On July 20, 2005, CEVA's management will conduct a conference call at 10:30a.m. EST / 15.30p.m. London time, to discuss the financial results for the quarter. To participate in the conference call, US domestic callers can dial 1-800-322-0079 and international callers can dial +44-800-917-4860. The conference call will also be available live via the Internet by accessing the CEVA web site at www.ceva-dsp.com.
For those who cannot access the live broadcast, a replay will be available by dialing 1-877-519-4471 (passcode: 6235275) for US domestic callers and +44-800-917-2646 (passcode: 7591655) for international callers from two hours after the end of the call until 11:59 p.m. (ET) on August 3, 2005. The replay will also be available at CEVA's web site www.ceva-dsp.com.
For more information about CEVA, Inc, visit the about section of our website.
This press release contains forward-looking statements concerning cost savings and 2005 operating expense guidance that involve risks and uncertainties, as well as assumptions that if they ever materialize or prove incorrect, could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions. . The risks, uncertainties and assumptions include our ability to effectively implement measures to reduce our operating costs on a timely basis; intense competition within our industry; the industries in which we license our technology have experienced a challenging period of growth; that the market for the sale of our technology may not develop as expected, especially in the case of newly introduced or planned to be introduced technologies; our ability to timely and successfully develop and introduce new technologies; that we rely on revenue derived from a limited number of licensees; and other risks relating to our business that are described from time to time in the Company's Securities and Exchange Commission reports, including but not limited to the Annual Report on Form 10-K for the fiscal year ended December 31, 2004, and reports filed after the Form 10-K. CEVA assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.