Good morning. My name is Judith, and I will be your conference operator today. At this time, I would like to welcome everyone to the CEVA Second Quarter 2008 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. (Operator Instructions). Thank you. It is now my pleasure to turn the floor over to your host Mr. Yaniv Arieli. Sir, you may begin your conference.

Thank you. Good morning, everyone, and welcome to CEVA’s second quarter 2008 earnings conference call. Today’s conference call contains forward-looking statements that involve the risks and uncertainties, as well as assumptions that, if they materialize or proven incorrect, could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions. Forward-looking statements include financial guidance for the third quarter of 2008 and the rest of fiscal 2008, our optimism about the licensing demand for our technologies, our increasing market shares, sources to our royalty revenue growth, continued broad adoption of our technology beyond our main handset market into new emerging markets and for next-generation products, and our potential market share expansion due to our customers ramping up production of products incorporating our technologies, market research data by ABI Research about the 3G data card market, our beliefs regarding the status of Sony Ericsson and Infineon and their impact on our business, and our beliefs regarding the trends within the Chinese market and the potential loosening up of the government restrictions on the white-box market. These risks, uncertainties, and assumptions include the availability of our CEVA DSP cores and other technologies to continue to be a strong growth driver for the company, the possibility that markets for our technologies may not develop as expected, the possibility of our customers licensing our technologies and incorporating our products do not succeed as expected, our ability to timely and successfully develop and introduce new technologies, our reliance on revenue derived from limited number of licensees, our assessments of trends within the Chinese market, and our ability to improve our licensing and royalty revenue in future periods. For more information, please refer to the risk factors discussed in the 2007 Form 10-K and other prior SEC filings. CEVA assumes no obligations to update any forward-looking statements or information, which speak of their representative dates. This conference call is conducted by Gideon Wertheizer, Chief Executive Officer of CEVA, and I, Yaniv Arieli, Chief Financial Officer. Gideon will cover the business aspects, while I, later on, will cover the financial results for the second quarter of ‘08 as well as the financial guidance for the third quarter and the remaining fiscal year of 2008. With that said, I would now like to turn the call over to Gideon. Gideon, please.

Good morning, everyone, and thanks for joining us today. I hope you took the time to read our press release with the results of the second quarter of 2008. Total revenue for the second quarter was $10.1 million, slightly higher than the first quarter of 2008, which was a record high in CEVA’s five-year history. Our second quarter revenue was 18% higher than the revenue for the second quarter of 2007. While the revenue for the second of 2008 was $3 million, a 19% sequential decrease as compared to the first quarter of 2008, but 58% higher than the royalty revenue for the second quarter of 2007. The decrease in royalty revenue from the first quarter to the second quarter of 2008 represent a typical pattern of seasonal weakness because CEVA’s customer report royalties in arrears, so the second quarter royalty actually reflect lower first quarter post-holiday season shipment, which is customary in our industry. During the second quarter, we signed eight new license agreements, of which seven were for CEVA DSP cores platforms and software and one for Bluetooth. Geographically, of the eight license agreement, one was in Europe and seven were in Asia Pacific region including Japan. Target application for the licenses concluded during the quarter are LTE modems, 3G data cards, HSDPA handsets, satellite phones, two way radios, wireless connectivity, consumer electronics, and gaming consoles. Before discussing the quarterly business achievements, I would like to make few observations about the implication for CEVA business and financial of recent publication regarding general weakness in the handset market. As you may know, our revenue income generally consists of two sources, namely, license revenue and royalty revenue. These two revenue streams are not derived from the same sources and are impacted by different economic consideration and market trends. On the…

Thank you, Gideon. I will now review the result of operations for the second quarter of 2008. Revenue for the second quarter was $10.1 million, thus slightly higher than the first quarter of 2008, and 18% higher than $8.5 million for the second quarter of 2007. Revenue breakdown was as follows; licensing revenue was $6 million, reflecting 60% of total revenues, and 9% higher than the second quarter of last year. Royalty revenues were $3 million, reflecting 30% of total revenues and 58% higher than the previous year. Service revenues were $1 million, reflecting 10% of total revenues versus $1.1 million in the second quarter of last year. Gross margins for the quarter were 87% on U.S. GAAP basis, or $1.3 million. Second quarter expenses continued to be higher than the comparable period in 2007 due to as we discussed on the last conference call associated with higher service-oriented costs that were allocated from R&D. Research and development costs were $5.2 million for the quarter, including $300,000 of equity-based compensation. Sales and marketing costs were $1.8 million including about $100,000 of equity-based compensation expenses. G&A for the quarter was $1.7 million including around $300,000 of equity-based compensation. Total operating expenses for the quarter were $8.8 million, which include an aggregated equity-based compensation of about $700,000. Interest and other income for the second quarter accounted for $546,000 net of foreign currency costs. The amount is lower than expected due mainly to significant lower interest rate and yield on new investment that mature during the quarter. On the tax front, we recorded a quarterly tax benefit of $87,000 on U.S. GAAP. Our quarterly tax calculation include among others, the consideration of the geographical location of the executed licensing deals and the overall revenue per tax jurisdiction. This, of course, can change from…

Thank you. (Operator Instructions) Your first question is coming from Allan Mishan of Oppenheimer. Please go ahead.

Hi, guys. Does the 9.5 to 10.5 include the 2.5 million from U-Blox?

Yes, it does.

So then why is the revenue excluding U-Blox taking such a decline on a sequential basis?

No, I wouldn’t look at it this way, Allan. We monitor and honored our customers on an ongoing basis. Every once a while, we find some money that either was not paid for us for different reasons or mistakenly not paid or a catch-up in the license fee per use fee in the license agreement. So this is on an ongoing basis. The same thing in U-Blox. In U-Blox, we have monitored and working on the products for quite some time. The only reason this had to have a special 8-K type of announcement was because this was tied to some legal proceedings that we had to update our 10-Qs and K. This was the only reason it came up in the press release, but on a business front, this is a license, the type of a license fee, a catch-up license fee like any other customer that we have any single quarter that wants to move from the single use and buy two more uses from new product launches or wants to move from a single used to a multi-use. These types of deals we have an ongoing basis. This is a regular license fee from the way we look at it, and the only thing it's popped up special this quarter versus other announcements or other deals that we signed similar to it is because of the legal proceedings. It's not something that have sued a company for a breach of patents or anything like it. It's ongoing business.

Okay. And then over on the unit shipments, approximately what percentage of the $70 million was baseband related?

Half.

Half?

Yes. So our market share is about 35 million baseband out of a just shy of probably 280 something million units sold in Q1, meaning we have about 12% market share similar to last quarter, which we had 13% worldwide market share, and I think that should continue to grow as we go along into Q3 and Q4.

Okay, great. And then of the licenses that you signed during the quarter, are they all prepaid -- sorry -- are they all per-unit or are you still doing some prepaid agreements?

No. No prepaid at all. It is a license and it has become successful, we will want it.

Okay. I guess another way to ask it -- when was the last time that you signed a prepaid license with somebody?

I really need to pull out my notes. I have some dust on them, so --.

Okay. A long enough time ago?

Yes. In the last three years that we have been on board, this is something that we are not promoting.

Okay, excellent. And then last one from me, can you give us an idea of what your baseband unit share is? A couple of the big OEMs, just so we can get an idea, and I am thinking specifically Sony Ericsson, LG and Samsung, and just ballpark figures -- how much of each of those OEMs uses CEVA at this point?

I don't want to go to into too much specifics, but when it comes to the three names, it will -- it's growing consistently, and right now it's, I would say less than 25%.

Okay, great. That’s helpful. Thank you very much.

Thank you.

Thank you. Your next question is coming from Daniel Meron of RBC Capital Markets. Please go ahead.

Thanks. Yaniv and Gideon, congrats on the continued execution. Can you provide us with a little bit more sense on how much visibility you have right now going into third quarter -- just following up on the previous question? You do have this $2.5 million worth of license revenue that you show up. You first said that, that CEVA’s revenue has improved dramatically because of that? And also can you give us a sense on the linearity in the quarter? Thank you.

When it comes to licensing, we do see active -- I would say. We have a few nice prospects in front of us. Let me just mention you one thing, it's the managerial expertise. We will -- eventually will have to become a licensee of us. So we have a new application coming with customers, so I would say the visibility is very good with licensing. When it comes to warranties, we more or less know what is happening. We mentioned it Sony Ericsson, this is a process that's ongoing and consistent. In China, eventually, this bottleneck there will be released at end of September, and Infineon, people know them. They do very well now.

Let me add there, Daniel, usually we do our earnings a bit later in the month, and our old reports come in around 30 days after the end of each month. We have, so far, received three of our major customers in the wireless side. I could tell you that all three are higher than the previous quarter, and so in line with what Gideon said on the licensing front and it includes the few royalty reports that did come in, I think we have a very strong visibility to our guidance.

Okay. So, and that's on a sequential basis or an historical basis, I assume?

Sequential, of course, the royalties we want to see, going forward, how they progress from one quarter to the other, and both seasonality and the new design wins that we talked about in length, help us grow the royalty line.

Okay, and then the linearity in the June quarter, how is that compared to prior quarters?

Well, I think we answered that in a sense that if there is a deal, which is quite major, signed in the first two weeks of the quarter, and that changes the whole linearity of the quarter. In this business, a lot of it is back-end loaded. That's, of course, not going to be the case in Q3.

Okay, that's fair. And then can you give us a sense on your content level of regarding the Infineon ramp up with Nokia? Obviously, we have seen some pushouts, but now it seems like that they are on track. I think I have seen some commentary about September initial launch and then volume ramp up towards May 2008. So should we expect Nokia ramp up to start showing up in your numbers in the March quarter?

Hopefully, yes, at least as far as we know from them -- not from them, from their public announcement.

Okay. And you feel pretty comfortable with that timing?

It's all about execution and the relationship between Nokia and Infineon. I don't think we have too much insight nor can we say even, if we knew. But based on the public announcement, if they do go into production in Q4, that will be royalty revenues for us in Q1. Historically, as you know, Q1 is always the strongest quarter for us in royalties. So that, of course, on top of what we have already baked in, should enforce our Q1 royalties.

Okay, that's fair. And then can you give us a sense on the FX impact this quarter and how much of that is built into your numbers for the back half of the year?

Yes, this is something that we continue to address on a quarterly basis, and our question there, and our answer, has not changed. We have dealt with it, as you could see from the expense level, I think, quite nicely over the last two quarters of this year. We are hedged for the second half of the year, and even if we do see and will have any other changes in the Shekel, dollar or dollar-euro or pound, that should not affect our overall expense levels and guidance.

That’s great. Okay. Good luck going forward. Thank you.

Thanks, Dan.

Thank you. Your next question is coming from Vijay Rakesh of Thinkpanmure. Please go ahead.

Hi, guys. Good quarter, yet. Just looking at the guidance, it looks like, on the license side, you have a good $2.5 million already booked, and on the royalty side – units, as Gideon mentioned, are up for the second quarter. You have a couple of newer phones coming out. So is the guidance, then, here, are you being conservative, the way of guiding it for on the top line for the next quarter?

No, I don't think so. I think we have a business plan, an annual business plan in place. We are looking for somewhere around 40 million, over 33 million last year. That's about 20% growth. When everybody around you is pre-announcing and when the environment is where it is, and we all know, I think 20% top line growth and, more importantly, if you build the model and I think most of the models have it around 80% growth, bottom-line, or EPS, I think that's a very nice, prudent, healthy model for 2008. From there on, we will guide as we get there, but I think for the time being it is not that it's prudent, but that’s a very solid business model to try to execute on, and this is what we are trying to do and hopefully I think we did that in the first two quarters of this year.

Vijay, one thing, you know, this U-Blox type of agreement, I mean, for us, every quarter we have one or two strategic agreements to take us to -- that gets to a level of $2 million or $2 million plus agreements. So the size of the deal is not something outstanding that make us to go to the beach and enjoy life. It's happened at the beginning of the quarter, it's good, it gives us better visibility, but let's take it as it is. We have other licensing live prospects. It looks nice, so good, it looks promising, but, you know, it's not science, not that it is.

Got it. Okay. And here, just looking, do you see Texas Instruments as a customer now? I missed that, you had a comment on Texas Instruments on the call?

Sorry. There is -- what people love that we are basically replacing Texas Instruments chips in strategic sockets.

Sure, okay. And here, looking at Ericsson and Infineon, you mentioned seven phones and almost 12 new phones listed at the end of Q2, so you should see a nice pickup in units at Ericsson as you go into Q3 as well, right?

Keep in mind, Q3, we will report it in Q4, right?

Got it. Okay. Great. Thanks a lot guys.

Thank you.

Thank you. Our next question is coming from Matt Robinson of Pacific Growth. Please go ahead.

Hi, good morning and afternoon. So let me start out with the U-Blox, just to square that away. The accounting treatment there, well, first of all, have you been paid already in the quarter?

No, we should be paid within -- around a month’s timeframe.

So, late August?

Yes.

Okay. And I realized that sometimes these auditors can be somewhat contrary with regard to the economics versus the reporting of your business, but do you anticipate including that in the royalty number or will that be down lower as another income item?

First of all, I think you should stick with the Wall Street related analysts, or sell side and not move into the auditor’s side. It's a different profession these days. Yours is the better one, I believe.

Don't worry.

Okay. So in order not to be such an expert in that field, I think, first of all, the way we see it today is that this is, as we said earlier, this is an ongoing type of business for us. It should be in the licensing line and not the royalty line. It's associated with different licensing issues that we have with U-Blox. We cannot exactly detail out what they were, but we are planning to show that as part of our licensing for Q3.

Okay. And what was your headcount?

183 at the end of June.

Where do you see that going?

For the time being, I think that those are the levels. If you recall, at the beginning of the year, we talked about being lower than 200 employees. We are keeping pretty much the same level as last year -- last year was 195 at this timeframe. One of the ways to offset some of those FX effect that we have been constantly asked about is close monitoring of expenses, which is not new to you. And some is associated also with headcount. So this is, so far, has been some of the ways for us to keep our guidance, our model intact, even though FX did affect every company that has foreign operations.

How far into the future do you expect your hedge to sustain?

For the time being, we are good close to the end of the year.

Okay. So in your licensing pipeline, last several years, with the exception of '05, which had a surprisingly strong licensing number in the first quarter -- your second quarter has been your largest period. Before U-Blox, did you have enough in your pipeline that you have a shot at duplicating the second quarter performance in the current quarter for licensing?

Not sure a 100%, follow you.

Okay. So setting the $2.5 million aside, do you have enough in your pipeline to do $6 million again?

Every quarter we have our goals that we want to reach. I think Gideon talked about a quite strong pipeline, not just in cell phones, but in other markets as well. I think that has not changed, whether we have the $2.5 million or we don't, that's the overall consensus about the business right now, it's quite solid.

I know you can't. Usually it's tougher to get things done late in the quarter or, I should say, in the third month and late in the second month during the September quarter, but what do you have -- if you look at the pipeline now for the licensing deals versus what it was three months ago when you last had a call, have you seen it increase, and can you talk about that qualitatively?

Matt, the pipeline consistently grew in the last, I would say, two years because we have more products to offer to our relevant market. That's a general statement. On the other hand pipeline is just forecast claiming, it's not a done deal. So, it gives us a target direction to work, but it's not a done deal. So I would not take --

I am abundantly aware of the caveats of closing deals for licensing. I understand that. I don't mean to -- I am not trying to pin you down. I am just trying to get a flavor for the tone of business, maybe a little bit incremental from your prior remarks. So --

The only remark here is the pipeline consistently grows, in the last quarter and I would say in the last year.

Is there any change in the cycle from when you start talking to folks versus when it closes? I am sure it ranges widely from customer and application to application, but have you seen -- I guess the way to put it would be have you seen any effects of the broader economy on closure rate impact and sales cycle?

No. No. Never.

Okay. So, if we look at the royalty drivers, you mentioned some brands and some new products that have recently started to ship. I think some of the more visible type of products, may be kind of headline-grabbing, but you get the feeling that a lot of what you are seeing in terms of your royalty component really might be in some unique markets like maybe in Japan and then with some of the companies that reference designs like Ericsson mobile platforms and these type of folks. Can you comment on how those sorts of markets that may not be quite as much in the headlines as Apple and REM and so forth over here are impacting you? And maybe also give us a sense of the timing for the 3G portion of Sony Ericsson product line and when that started to impact your royalties and how meaningful that's been so far? Because, as I recall, prior to the 3G, most of your royalty content with Sony Ericsson was in an application processor, more so, than the baseband, I may be wrong there, but I am just trying to give us some distinction there.

Well, let's take the Sony Ericsson first. You are right. Up until, I would say, a year ago, we were also in part of an application process little bit and now all the, I would say most of the phones that are coming out of Sony Ericsson that has a 3G, includes our technology. Sony Ericsson is just 3G-baseband -- 3G and more accurately 3.5G. Now, that’s Sony Ericsson. Does this answer your question?

Yes. Just kind of. Well, it's certainly part of it is -- when did that part, that business, start to become significant and how early are we in the ramp phase for that?

It started Q2 '07, I think, we’ve said, and significant -- now it has become significant. Quarter-over-quarter it is growing and it is significant in our work.

So that has been about a year, and is that pretty typical that it takes some two to three quarters for these products to ramp to become significant for you?

Yes. I mean, look at in our companies that announced, like last week, LG. LG, in their earnings, talked about some of their most successful phones like the Prada, and the three or four quarters that they were selling, they sold about 7 million units, and they were quite proud of that achievement. So it takes time. Even if you want a new phone, and there is one that was launched two weeks ago, a well-known one and look at the ramp up, and this was a very nice publicized new device, 3G device. It takes time to ramp on to millions and millions of units. We read just for that phone, based on EE Times and other publications, that this phone could sell 30 million to 45 million units next year. So, yet to be seen, but if I want to try to address your question and leave some time for others, I think that what we have achieved over the last 12 months is that we have been successful in entering every segment of the market. I think you have tried to get some clarification from different aspects of the market; 3G is using us, and Samsung is using us and Sony Ericsson's phones and LG phone and Sharp phone. In the 2G, we were all across the Board with NXP related, Infineon-related phone, baseband chips, and Spreadtrum baseband chips and the 2G, the low end market, or simpler type of application phone, this is the Chinese, the Brazilian, the Indian markets, which again we discussed over the call. Company like [Spectrum] as across other product lines there, and on the earnings we had a joint press release with them earlier this year that they sold about 30 million phones last year. I think that their annual guidance, public guidance, was close to trying to double that or just size doubling that in 2008. So the prospects that, as far as we could see, looks at the different models that are out there from every segment of the market, high, mid, and low. Across multiple players and vendors, whether it's more known or less known, but these are all success stories than initial ramp ups over the last 12 months or so.

Yes, okay. I want to follow-up and then I'll let somebody else ask some questions. So if you wanted to characterize your royalty patterns for the period we're in now that or, rather, for the period you're going to report in October, would it be more a function of just normal seasonality and run rate royalties, or would it be more a function of new designs going into production? And then I guess the other thing I wanted to confirm is did you mention that you had a big license that already closed in the current quarter, the September quarter? I thought I heard that.

The big license was referred to U-Blox for the licensing side. So the royalty side, it's all of the above. But the numbers and the pre-announcement that happened in Q2 across all the wireless side, I don't think seasonality is the big driver for us in Q2 just because of the market environment. I think it's really design wins and new products that have been launched and market share gain that will drive our royalties in Q3 for us which represent to remind you all only Q2 shipment and all of the Q2 numbers pretty much are out there today.

Thanks for giving me so much time.

Not a problem thanks Matt.

Thank you. Your next question is coming from William Frederick of [Grant] Norwood Capital. Please go ahead.

Good morning gentlemen. I hate to harp on U-Blox, but let me try to state back to you what I think you're trying to communicate, which is that this business always requires some extra effort and I know this because I've owned many IP companies. But there's always an extra effort to claw back from your customers what might be owed to you, whether it's license or royalty. The audit process is a normal process, and you occasionally have to escalate, say, to a court. My question is since you have the U-Blox license hitting but are not taking guidance up, essentially it does provide a bit of a cushion for the quarter, and you could well exceed the levels that you originally guided to, is that correct?

In theory, everything is correct. Yes, that's correct for any particular quarter. If we close more deals, then we could be in the high range of our guidance. We hope that that could be the case, but because, as you know, other IP companies in the space, we gave the guidance and hope to be in line with that. If you could do better, that's always be, I'm sure, everybody will be happy including us.

Now, does this $2.5 million represent an accurate accounting or what is owed? Or is it just a settlement, and there's no more forthcoming? Is it a compromise?

The settlement we stated in the press release and this is a customer that continues to pay us royalties on an ongoing basis, so that would not change.

Okay. But is this a compromise on the amount owed, or is this what the ledger says, so to speak?

This is a compromise because it's an out-of-court, preliminary settlement, and we did not have to go through a long and expensive court proceeding. That was a very short and quick result.

Is it less than you think you were owed?

I think we said, enough. There are always two sides to every coin. We claim something; they would claim something else. You could take it in litigation, pay $1 million of legal fees and then see who is right, or take a different approach, which I think we took, and both sides agreed upon, and we talked about the outcome which we believe was -- we are very happy with.

And you still have a customer?

Yes, of course.

Very good. Thank you.

Thank you.

Thank you. The next question is coming from Steven Silk of C. Silk & Sons. Please go ahead. Steven Silk - C. Silk & Sons: Hi, good morning. Of the new licenses that we signed in the second quarter, how many were from new customers and how many were from existing customers?

Well, out of the eight, as far as I recall, four, maybe five, were new customers. Steven Silk - C. Silk & Sons: Okay. And you had talked about taking market share from TI and what have you. Could you talk about how that's happening? What's differentiating you guys now that you're able to do that?

I don't know if you had a chance to -- or you met us in our latest conferences that we attended but, in general, the model that we are offering is provide to our licensees a cost advantage. And that's the reason that they chose us to basically be able to go into this market with a cost advantage.

When Infineon, on their analyst day, talked about the 3G design on its cell phone, they mentioned that they have a cost reduction that replaced Qualcomm of 20%. That was in their -- some of their remarks on that analyst day, and that just strengthened what Gideon just said that every one of our customers that has implemented CEVA's technology has a pretty significant advantage, cost-wise, we believe, also, power-wise and feature-wise over some of the other players out there, whether it's a TI or a Qualcomm or internal developments. Either some of the replacements that have competed with us and, at least, in quite a few [miles] we have won the design.

Let me add something. I don't want to elaborate too much, because the people in the call are waiting, in the queue waiting, but the licensing model provide to our customer also multi-sourcing capability. When they buy chips from TI, this is one phone. They cannot buy equivalent chip from another phone because it includes TI proprietary technology. When they license technology from us, they can basically manufacture it or use supplier from whoever they want, and that's by itself is a cost advantage also supply chain management. Steven Silk - C. Silk & Sons: And some of the new chips and the new agreements come on aboard, is there room to grow your average selling price or average royalty revenue per chip?

In a sense our model is installed. As Gideon mentioned, there are a few types of ways to license our technology. There is just the baseband, if you talk about the cell phone market, which is the heart of the engine, and of the device. And, as Gideon mentioned, they are on top of that other applications. If we could offer the customer more software, more voice over IP, video, voice, a music type of capabilities, in many cases we manage to charge higher overall fees, whether it's licensing fees, in many cases, royalty fees. So it becomes on what the customer needs and the offering and the final solution, but every new core, which has more functionality capability and has more features, usually is priced initially at a higher price. Steven Silk - C. Silk & Sons: Okay. And, finally, your balance sheet is so strong, and I keep asking this, what are you looking for as far as how to deploy that either a share repurchase or even a dividend, perhaps?

You asked me that and I think we are trying to be as specific and straightforward as possible. We have a lot of cash on the bank, on one hand, but, on the other hand, I think what the board of directors and the management is really focused on is execution. And we talked about our business model, we talked about our prospects, we talked about the roll to grow from the EPS growth. I think, right now, the main focus is to continue to manage the business with the growth rate and the success we are looking to come and show, and everything else will fall in place. We are not ruling out a lot of buyback and not acquisition that is similar organic to our business, which should bear high gross margin versus 2% or 3% at the bank. But the main focus right now this is the second good quarter in 2008, and the highest revenue CEVA ever had, in a sense, this is our main focus for the time being. Steven Silk - C. Silk & Sons: Alright. Thank you very much.

Thank you. Your next question is coming from Doug Whitman of Whitman Capital. Please go ahead.

Congratulations on the nice quarter. Question a little bit that Ericsson is very well publicized each success Apple has had with their iPhone. If I understand it correctly, there was very little shipments, obviously, in June to Apple that you'll see that small amount of shipments in the September quarter and then in the December quarter, the huge amount of shipments that have been ramping this quarter will show up in the December results?

We cannot comment specifically about other than, of course, what everybody knows. What we know from, let's say, like, EE Times what they say the reason for the delayed shipment was a shortage in components, the light to the touch screen and now this bottle neck in the supplies now results and they're ramping up production. And how much they'll make, how much they will say, there are difference of opinions here, and I don't feel comfortable to share.

Well, I'm not asking you to forecast. Let's just assume that we go with what the market has said, which is a very big ramp, and as a customer trying to buy one, having to wait 20 days to get one. So obviously, they haven't even done the worldwide rollout yet, so it's a very hot product by all people's accounts on that, and if you could comment on that. I'm just trying to make sure I'm following as the delay is going to be approximate quarter on this, assuming that you have the product, which I know you can't officially confirm. And Infineon has it, and you have it, and Infineon, even though we can see the Infineon part in it, we won't see the revenues for basically a quarter, always in arrears. This is same sort of agreement you have with most of your other customers, if you had an agreement?

Yes, that's correct, Doug. It will stay ramp up as strong as everybody, as soon as they will, and we hope so they will. That should show in Q4 royalties and, of course, probably Christmas can be even bigger there, and that will show in our Q1 '09 numbers. So that's consistent with our model and your understanding.

Okay. And then one thing, which I've always harped on you guys, your stock had tremendous volatility over the last two quarters, both up and down. And the logic of not and it's been clearly accretive on a lot of these down points of not having a buyback plan put into place. So if you should get this volatility, being able to take advantage of it and also, obviously, the company has excessive cash consideration of a stock dividend?

Yes, Doug, I think we tried to address that in the previous question and gentleman that asked this similar question of the use of cash, and we have no control of the market, so you're right that it's volatile these days, every other stock as well. And right now I think that we came up with a pretty solid quarter guidance, and we're very excited about the forecast and the opportunities with all these design wins that have taken place, and this is what we are focusing on. And I think it will pay for itself with the numbers backing it up. Of course, Doug, again, in this environment, if I look at the last six months, and I did try to compare that in non-GAAP -- our $20 million versus $16 million, six months of '08 versus '07, or $0.16 non-GAAP versus $0.07, that speaks for itself, and that will, I think, do most of the work for us. Both the board and the management continues to monitor the buyback program. It discusses them, it did today as well, and everybody is focused on and continue to grow CEVA and add the shareholders value.

So, in short, you're hoping Wall Street can't see that [slippage] again? You can't comment to that, can you? Okay. Thank you for the great results and great ’08, guys.

Thanks Doug.

Thank you. Your next question is coming from Warren [Dereleck] of Morgan Keegan and Company. Please go ahead.

Alright. Just a quick question in looking at the growth rate projections you gave for '08. Does it look like '09 would be a time where you could maybe anticipate a little more ramp up in some of these growth numbers, both in licensing and royalties?

Yes, of course. I mean, we just came up with one of the strongest licensing cores ever in CEVA's history. I don't think that changes. I think the environment is good. We talked about different design wins, even different views. Gideon mentioned the NXP and ST joint venture that needs to close sometime in August. They will need to like in something. That's potentially the Q3 event. Many things can happen. I think we have always played it cautiously and want to go step-by-step and not overleap a jump or mountain that we cannot reach with confidence. I think that's very important to do in these types of market conditions and not to start shooting off numbers and then pre-announce to coming companies -- our customers. Companies that we care about, every single one pre-announce, so we could give the different guidance so different expectations, which could be very nice to hear in this conference call but if you don't achieve them, then you are getting hammered for a specific reason. I think we are coming from a different approach a little bit, and want to build this step-by-step, but business is solid.

Also, I would reiterate the same sentiments of the last caller in that the volatility in the stock is such that with the huge amount of cash you have on the books, it wouldn't be -- to me, it's worth consideration for maybe taking advantage of that at times. Last quarter being a great example, but, again, that's just a sentiment of thoughts I have. Good quarter, and we'll talk down the road. Thank you.

Okay. Thanks for the inputs.

Hey guys, I have couple of follow-ups. First, when you incur those audit costs, such as you did with U-Blox in order to investigate them, what they're doing. Does that fall into SG&A or into cost of goods sold?

It's G&A, just legal costs, and they're not material because we have all the expense over the last two or three quarters. If you recall, we sued U-Blox back in November of last year, so a lot of the costs were already in the fourth and first quarter, and we'll have some additional cost now but nothing material.

Okay, great. And then is there any seasonality in the licensing business?

No, there is no seasonality. The licensing business, it's ongoing profit that you will go and speak with customer, and they decide to license based on their product development.

Okay, great. And then the last one for me, when you talk about having 27 paying licensees, what is the total number of licensees?

For the day, CEVA, used to grow started licensing? I would say north of 200 deals that we signed, but when we count 27, these are actual customers. So sometimes customers can have multiple licensing agreements, yes. So if you count out of the 27, this could be a bunch of different two or three times the number of license agreements that generate those royalties and paying customers and not license agreements.

What I'm trying to get is, are there licensees that are not included in that 27 that could potentially start paying royalties to you in the future?

Sure, of course. Sorry, we didn't understand. We talked about in the last quarter, and that's true for this quarter as well. We are looking and monitoring two or three additional customers, not in the cell phone market but other multimedia type of applications that should rollout product in the second half of this year. But, absolutely, finally, we should see some royalties from other new interesting product lines.

Okay. Thanks very much.

Thank you.

(Operator Instructions). Your next question is coming from Vijay Rakesh of ThinkPanmure. Please go ahead.

Just going back, when you look at Ericsson and, let's say, Infineon, where do you think your share goes from, let's say, in Q2 into Q3 based on the ramp that you're seeing on either the chipsets or on the new models that are coming out, and where do you see that by the end of the year?

Well, you know, with these types of a question, we should ask --.

You should ask those customers, either public company with their own forecast, which, even if we do have some visibility, of course, we cannot comment. We could comment, as what we already said, that if Infineon uses it across all their product lines, so if they see good visibility from China, from Samsung, from many other design wins, that means CEVA is inside, EMP in almost every model that has been launched in 2008 it has for 3G. It has CEVA inside. Gideon mentioned seven new models shipped in Q2. 12 additional new Sony Ericsson models that were ramped up towards the end of the quarter these are all essentially CEVA inside. So a lot of things going on here, positive things. Exact numbers, of course, we cannot comment on.

And here, as we look at your R&D and SG&A, should they stay very flat to the rest of the year?

Pretty much as we guided, and the same levels of we guided -- OpEx, you know, 7.8 to 8.4 excluding 123-R. That's pretty much of the range that we have been and believe that could run the business, yes.

Alright. Thanks.

Thank you.

Thank you. We have a follow-up question coming from Doug Whitman of Whitman Capital. Please go ahead.

Despite my hope otherwise, your great numbers, market flat, your stock down over 10%, and, certainly, once again, kind of would share the logic if you guys having a buyback program in place. So I certainly hope you'll reconsider it, and go back to your board fairly quickly, because this is a great opportunity for the company to get it more accretive, a buyback into place. Thank you.

Yes, I second your earlier comment about the market.

Thank you. There appears to be no further questions at this time. I would like to turn the floor back to your host for any closing remarks.

Thank you, again, for joining us today and your continued interest in CEVA. CEVA will be presenting at upcoming RBC 2008 Technology Media and Communications Conference in San Francisco, California, in the first week of August, August 6th, and then we invite you to join us there. Thank you and goodbye.

A replay for this call will be available using dial-in numbers 800-642-1687, or 706-645-9291, with the conference ID number, 54500819. This concludes today's CEVA second quarter 2008 conference call. You may now disconnect.