Last Call: DSP Group falls on weak 2Q and full-year outlooks

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May 2, 2008

NEW YORK—Shares of DSP Group Inc. plunged Friday after the chip maker pared its full-year revenue forecast and predicted slimmer profit margins, along with a disappointing second quarter.

On Friday, the San Jose, Calif., company posted an adjusted profit of $1.4 million, or 5 cents per share, in the first quarter. Revenue climbed 48 percent, to $72.7 million from $49.3 million. Including one-time items, DSP lost $7.6 million, or 25 cents per share.

On average, analysts expected a profit of 5 cents per share on $73.1 million in revenue. Analyst estimates usually exclude one-time items.

A year ago, DSP said it earned $5.3 million, or 5 cents per share. The company had a lower share count of 28.7 million at the end of March 2007, compared with 30.8 million in the latest quarter.

The company lowered its expectations for the full year, forecasting $300 million to $320 million in revenue and margins of 36 percent to 39 percent. In January, DSP anticipated $325 million to $355 million in revenue, with margins of 38 percent to 42 percent.

Analysts expected $337.2 million in revenue.

The company's second quarter forecast of $70 million to $76 million in revenue also falls short of Wall Street estimates, as analysts expected $80.8 million. DSP said its profit margins will be between 34 percent and 36 percent for the quarter.

Shares fell $3.48, or 26.2 percent, to $9.81 in afternoon trading.