Good morning. I will be your conference operator today. At this time I would like to welcome everyone to the CEVA Second Quarter 2010 Earnings 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 session. (Operator Instructions) I would now like to turn the call over to Mr. Richard Kingston, Director of Marketing and Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone, and welcome to CEVA’s Second Quarter 2010 Earnings Conference Call. This conference call will be conducted by Gideon Wertheizer, Chief Executive Officer of CEVA; Yaniv Arieli, Chief Financial Officer of CEVA, and I, Richard Kingston, Director of Marketing and Investor Relations. Gideon will cover the business aspects and the highlights of the quarter, followed by Yaniv, who will cover the financial results for the second quarter and provide financial guidance for the third quarter and fiscal 2010. I will start with the forward-looking statements. Today’s conference call contains forward-looking statements that involve risks and uncertainties, as well as assumptions, that if they 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. Forward-looking statements include financial guidance for the third quarter and fiscal 2010; general outlook for 2010; optimism about our licensing pipeline, royalty revenue, and increased design activities in 2010; optimism about our customers’ displacing TI and Qualcomm; optimism about market growth in LTE, home entertainment, base stations, set-top boxes, digital TVs, HD video, the Chinese TD-SCDMA market, and alternative WiFi connectivity devices and our position within them; and our customer production schedules and our ability to generate revenues from new products and technologies. The risks, uncertainties and assumptions include the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for us; our success in penetrating new markets and maintaining our market position in existing markets; the effect of intense industry competition; the possibility that markets for our technologies may not develop as expected, or that products incorporating our technologies do not achieve market acceptance; our ability to timely and successfully develop and introduce new technologies; our ability to continue to improve our licensing and royalty revenue in future periods; and general market conditions and other risks relating to our business, including, but not limited to, those that are described from time-to-time in our SEC filing. CEVA assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. With that said, I would now like to turn the call over to Gideon.

Thank you, Richard, and good morning everyone, and thank you for joining us today. I hope you had the opportunity to review our press release with the financial results for the second quarter of 2010. Our revenue for the quarter was $10.6 million, which represents a 16% increase when compared to the second quarter of 2009. Revenue for the quarter was at the high-end of our guidance, and slightly higher than the previous record achieved in the first quarter. Royalty revenue for the second quarter of 2010 was $5.2 million, which was also a record high representing a 30% increase over the second quarter of 2009. This is the third consecutive quarter in which we have achieved record high royalty in our revenue. During the second quarter, we completed nine new license agreements. All of the agreements were for our CEVA DSP cores, platforms and software. Geographically, four of the license agreements were in the U.S., four were in Asia and one was in Europe. Target application for the license has concluded during the quarter are primarily basement processor for 3G and 4G handset, mobile broadband, base stations, Voice over IP gateway, digital TV and Blu-ray DVD. We are extremely happy with our achievement for the second quarter in relation to our licensing activity and our growing traction in basement market, including both market share and high-profiled quarter. The licensing agreement completed in this quarter reflect growing demand for advanced DSP technologies, particularly clearly in the mobile broadband markets with devices such as smartphones, tablets, laptops and other multimedia devices. Every device targeted at providing mobile broadband connectivity will require the inclusion of DSP technology. I would like to highlight few important achievements on the licensing front. Three of the new licensing agreements executed during the quarter were for leading…

Thank you, Gideon. I’ll now review the results of operations for the second quarter of 2010. Revenues for the second quarter was $10.6 million at the high end of our guidance and 16% higher than the second quarter of 2009. The revenue breakdown is as follows; licensing revenue was $4.6 million reflecting 43% of total revenue, 7% higher than the second quarter of last year. Royalty revenue was $5.2 million, third sequential record high reflecting 49% of total revenue and 30% higher than the second quarter of 2009. Royalty revenue for the second quarter of 2010 also include approximately $0.4 million of catch up royalty on past shipments resulting from two existing customer in the consumer space. In the second quarter of 2009 we also recorded a catch up royalty of $0.9 million on past shipments resulting from a single customer. Excluding these two events, our royalty increased net on a year-over-year basis by 53%. Service revenues was $0.9 million which accounted for 8% of total revenues, down 3% compared to the second quarter of last year. Quarterly gross margin was 92% on both US GAAP and non-GAAP basis, approximately 5% higher compared to the second quarter of 2009 for which we recorded 87% and 88% on GAAP and non-GAAP basis respectively. As for the operating expenses, research and development expenses were $4.5 million for the quarter including approximately $140,000 of equity based compensation expense. Our sales and marketing costs were $1.8 million including approximately $100,000 of equity based compensation expenses and our G&A cost were $1.6 million including approximately $300,000 of equity-based compensation. Total operating expenses for the quarter were $7.9 million, which included an aggregate equity-based compensation expense of approximately $525,000, approximately 9% higher than the operating levels for the second quarter of 2009. Our total operating expenses…

Thank you. (Operator Instructions). Your first question comes from Gary Mobley with Benchmark Company. Gary Mobley – Benchmark Company: Hi guys, congratulations on the good results. You guys mentioned in your prepared comments that you have now landed or signed two Tier 1 cellular baseband licensees. Based on that – based on what your potential penetration could be at those Tier 1 licensees, what do you think your cellular baseband share could rise to in three to four years time?

Well, Gary, let me – it’s Gideon, let me first of all elaborate on these firstly. These are firstly OEMs and not semiconductor companies. We see a phenomena that OEMs are basically taking the lead in developing future technology or next generation technology as they rather to wait for merchant chips to be available supporting these sound cards. This is an interesting trend. I’m not – it’s hard to say at this point what will be the volume coming out of these adoption of the OEMs. There is a significant benefit in terms of qualifying our new designs on to the LTE and LTE Advanced, which I believe can further lead to semiconductor adoption of the technology for the merchant market chip. Now in terms of adoption of our technology in general of the overall market, I can – I mean we can reiterate what we have said in the past, if we – and we have I think good indications for this – that this 45% to 50% within the two – the next two, three years is achievable. Gary Mobley – Benchmark Company: Okay, let me dig a little bit deeper into that. What is your definition of the Tier 1 cellphone OEM? Is it a top five OEM or is it a top eight or 10?

Top five. Gary Mobley – Benchmark Company: Okay. And I was hoping that you could shed some light on what’s your licensing pipeline looks like relative to recent past and as well what is mostly in the queue of potential license deals looking out of next couple of quarters?

This is – this is a good question. First of all the pipeline is now comprised of lot of cellular baseband adoptions or interest. And it relates to the handset or the user equipment, hence it’s not just the handset. It’s mobile broadband in general. It include data cards and tablets and netbooks and all the different variants where you are going to see mobile broadband. We have in our pipeline a nice queue of infrastructure, companies that aim to go to the micro base stations, Picocells and Femtocells. In the consumer electronic, the HD audio, we have a nice pipeline. Here we are more selective in terms of focusing on Tier 1 OEMs to grow and we signed two, already we signed in June this year, two Tier 1 OEMs to use our DSP in the future consumer electronic products. So this in a nutshell what the pipeline looks like, user equipment, cellular infrastructure, and consumer electronic audio. Gary Mobley – Benchmark Company: All right, thank you guys.

Thank you, Gary, and welcome on board.

Your next question comes from Anil Doradla with William Blair & Company.

Hi Anil, good morning.

Anil, your line is open. Brian Nugent – William Blair & Company: Hi, it’s Brian in for Anil. You mentioned LTE user equipment. Can you just expand on that? And then it sounds like in LTE, this is kind of broadening your opportunity beyond handsets. Is that the right way to think about that and why is that?

Yes, that’s the right way to look – to look into this one. LTE basically is a, I would say, a precondition for mobile broadband. LTE can provide you up to 150 megabit. By the way one of the agreement takes us to the next generation LTE, it’s called LTE Advanced that is capable to provide up to 1 gigabit per second. So the LTE basically open up categories for product. And I think I spoke in the past, or we spoke in the past of the – that overall market size is not anymore the 1.4, 1.5 – let’s say I am talking about the three years from now in handset. But it’s more or like 2.2 billion units that include all those mobile connected devices. Brian Nugent – William Blair & Company: Okay. And then in the home entertainment market, now you talked about adding another Tier 1. Can you just talk about how many Tier 1 vendors you are working with and then to what extent are those vendors outsourcing now? Is it just a couple of applications or do you see that broadening more significantly?

Well, that’s an interesting question. First of all, when it comes to the agreement that we signed this quarter, this is indeed the Tier 1 semiconductor company that’s used in the past its homegrown DSP for doing audio. And they decided to switch and not use anymore of their homegrown DSP and go to our framework or infrastructure of software and hardware and that’s going forward. So far, as I said, we are in a (inaudible) that we are trying to work with first tier companies. So far we have three companies that work with us and actively design based on our DSP in audio.

I would add to that Brain – this is Yaniv – that we also have if you recall design wins, at least two important ones in the application processor. So other than the audio side of consumer electronics, we are also now empowering cellphones in the application processor as well as tablets, netbooks and handheld devices for the video flash audio type of functionals. This is something that we did not have and we focused more in baseband in past, but we did have the design switch our shipping products in our production. So this is another factor to look at if you would exclude that from the baseband business, but call it consumer, which is application processor as well as a consumer-related product. Brian Nugent – William Blair & Company: Great. And can you just talk about – I mean we are talking about handset share being what it is and increasing. Do you have the – can you kind of help us gauge what your market share might be outside of handsets and where that could go?

Yes, we were asked about that in the past as well. I think it’s a bit premature. I mean if you would have asked us three or four years ago when we had 3% market share in baseband, it would be almost a non-relevant type of question, because we were such a small player then. A year-ago at 18%, we already had a pretty firm outlook and plans of where we want to reach, and just the year after we are at 29% market share. Our goal in baseband is still is far higher what we want to achieve in the next three years or so, it could be in the 50% range more or less. If you look at all the other segments of the markets, these are much, much newer players and markets for us. So it’s the same when we compare us three years ago in the baseband when 3% didn’t mean too much. I believe that two or three – two years down the road, 18 months down the road when we have more significant shipments and numbers that we could evaluate a bit, we will be happy to give out some more color on the non-baseband type of modems – numbers. Gideon gives a lot of color or new segment for us, new opportunities for us, base stations, consumer devices, application processors, I don’t think we have yet the data – the sufficient data to come up with a well-defined numbers. I hope that we could do it in the near future. Brian Nugent – William Blair & Company: That’s helpful. Thanks a lot guys.

Thank you.

The next question comes from Matt Robison with Wunderlich Securities. Matt Robinson – Wunderlich Securities: Congratulations. Talk a little bit about this transition to CEVA-XC and the move towards the – move kind of up the food chain to the OEMs. I know you guys for years have been – for lack of better words, sort of stuck in the Teak and TeakLite realm for most of your volume and we haven’t seen a lot of movement from this semiconductor companies to adopt the new architectures and then the software for – presumably the software associated with that. Do you see where the OEM started to use to license more – it seems like it is more of a clean slate and maybe a little less inertia to overcome in adopting a new architecture. Do you – at some point do you expect these OEMs to then push these the new architecture down the food chain to the merchant level so they can have multiple sourcing at the merchant level or do you expect the OEMs business models to simply be going into more of a full custom sort of foundry or a business model? I also have a couple of follow-up questions regarding the near term.

Well, Matt – this is Gideon. First of all, we are asking ourselves why indeed the OEMs are adopting technology or stepping ahead and developing the modem (inaudible). One reason I mentioned because they need to be ahead. They need to push the next-generation standard. Another thinking which relates to the technology itself, the CEVA-XC for OEM is a perfect fit because it is software oriented. The OEMs are not capable or not specializing in developing all those hardware blocks that the semiconductor companies can develop. They cannot carry the cost of the take out costs which has now become significant, close to $1 million. They will satisfy the software level and this is what CEVA-XC also then to do. To your specific question, going forward I believe we will see a mix meaning product may be premium products, the chip itself is done by the OEMs or manufactured by the OEM through some of the semiconductor partner and merchant market that follows the guidelines of the OEMs.

Matt, let me add another aspect to your question. And if we count the number of CEVA-X which is the higher end, the newer type of DSP that are out there today, we have about 26 active customers that has licensed the CEVA-X. So you are right that for many, many years, the older generations peaked and then declined were the main source for revenues, but that has shifted when we look at the scope of the CEVA-X and going further of course the CEVA-XC, which is the highest and the best of breed for higher-end applications. Matt Robinson – Wunderlich Securities: Thanks, Yaniv. And the – I guess, well, I got you, maybe you could give us the headcount and the cash flow number you quoted that is from operations. Can you confirm that and also give us a CapEx and depreciation? And then, Gideon, we heard yesterday afternoon and overnight from Broadcom and Infineon, and Infineon seemed to have real strong results and outlook commentary, Broadcom not so strong in the basebands for the June quarter but real strong outlook commentary. How does – and clearly the June quarter is what we are looking for is an indication of what you see from you on royalties for the September quarter. How should we look at that in light of your royalty expectations or are should we just – or is are there other customers that we should think would be driving things more in the September quarter royalty number?

Yaniv, do you want to start.

No, go ahead.

Well, here is the thing. I think you are right. We think that Infineon is doing well in the baseband space, maybe it relates to the Nokia ramp up that is expected. Going forward with royalties, I believe – here is what – how I see things. First of all, I think in the next few quarters, we are going to see continued growth in the quarter. I would say about $5 million. Now there is a step, a strong cue, we were in 2009 – 2008 in the range of $3 million. In 2009 we went to $4 million – $3 million to $4 million or $4 million in – starting from Q4 2009 we reaching to the $5 million and I believe that more power in our report in Q1 ’11, we will see another step in royalties.

Step-up of course.

Of course, step-up in royalties. I think we have a good indication that this is going to happen. This will be both in of course market share and dollar stocks.

And, Matt, by the way you could also pile these facts to the introduction of the new products we talked about, whether it is Samsung, whether it is Nokia, all these products are out now or later in the second half of this year. So all this together with the relatively good results in the wireless space for the customers and companies you mentioned should help us get to that new kick or higher royalty standard early 2011. But, in the meantime, we’ll of course increase the level that we are at and have been for the last three quarters. On the housekeeping question, we are 184 employees at the end of this quarter versus 183 in the last quarter. The operating cash, positive cash flow is $2.7 million, and both CapEx and depreciation at around $250,000. Matt Robinson – Wunderlich Securities: Thanks gentleman.

Thank you, Matt.

The next question comes from Allan Mishan with Brigantine. Allan Mishan – Brigantine: Hi, guys. Just a couple of quick ones. First, what would the royalty units have been if not for the $0.4 million catch-up?

The overall instead of a 126 million units which of them we said that a 105 are paying royalties, I would look at 95 million units of paying royalties for this quarter, excluding the catch-ups. So all in all it is about $4.8 million and about 95 million units for paying royalty on top of that versus the 101 million paying units for the prior quarter which generated about $5 million. So if you do that analysis and you take the overall numbers that we mentioned earlier, we do have an increase in baseband business from 81 million to 83 million units which is positive and this is how we got the increased market share because the market went down 14%. On the other hand, we have the typical seasonality 18% decline in units and more or less in dollars from the non-baseband business which represented both Christmas, Q1, lower shipments and the environment. So those are the numbers if that helped out excluding the catch-up. Allan Mishan – Brigantine: No, that is perfect. And then do you have a market share for the year for CEVA just for 3G baseband?

No, I don’t think we have that type of analysis. Yes, we are looking at the whole baseband market. It is a bit tricky today because 2G if you look at Nokia’s new phone introduction which we discussed, the C series, the X series are all type of smartphones, they’re low-end or low-cost, but smartphone. So it is even difficult to compare a 3G to a 2G if you look at the phone functionalities these days. So we don’t have a specific breakdown. We do have for the overall baseband business which includes the two. Allan Mishan – Brigantine: Okay. I mean, I was just – my own estimate would be let’s say in the 10% range and I do not know if you have a feeling whether it is a higher or lower than that.

Well, just if you take what Infineon says that by the end of 2009 in 3G they had 14%. Allan Mishan – Brigantine: Okay. So that would be higher than that.

Not including the Samsung, not including Broadcom. Allan Mishan – Brigantine: Right.

It should be higher but – Allan Mishan – Brigantine: Okay.

It is a bit difficult to assess and quantify. And, Allan, keep in mind that today 70% of the volume is 2G, I mean up to EDGE. Allan Mishan – Brigantine: Of course.

Only 30% is 3G. Allan Mishan – Brigantine: Okay, thanks very much guys.

Okay, thank you.

(Operator Instructions). Your next question comes from Warren Darilek with Morgan Keegan & Company Warren Darilek – Morgan Keegan & Company: Hello, gentlemen, again a great quarter. A question on what would be the catalyst and/or timing of someone like a Qualcomm to use DSPs outside of their own investment there and what would be the economics for that catalyst of doing that?

That’s kind of a one-million-dollar question when Qualcomm would – right now Qualcomm is using homegrown DSP. The homegrown DSP when it comes to LTE is not sufficient to run everything in the software and that’s the pitch that we are using for the CEVA-XC. So there’s a bunch of hardware to do. Will this be sufficient for them to switch to adopt outsourcing and go to the CEVA-XC, it’s hard to say at this stage. Warren Darilek – Morgan Keegan & Company: Okay thanks. And also, is there any update on the first major android product using CEVA cores? Is there anything that could be said there?

Well, Galaxy S is the Samsung high profile android based is in CEVA. And there are bunch of phones that we do, I don’t recall exactly the brand – the market brands of all these things. But Galaxy S is something that we heard a lot. Warren Darilek – Morgan Keegan & Company: Thank you.

Sure, thank you.

Your next question comes from Daniel Meron with RBC Capital Markets. Daniel Meron – RBC Capital Markets: Hi guys. Congrats on the ongoing execution here. Nice work.

Thank you, Daniel. Daniel Meron – RBC Capital Markets: Sure. Just a quick question, I might have missed it earlier. Were there any FX impact either in the top line or in the bottom line?

FX effects. Daniel Meron – RBC Capital Markets: Yes.

No, we said in the past that we’re fully hedged for the rest of the year. And, no, we don’t have any FX there. Daniel Meron – RBC Capital Markets: Okay. And considering the ongoing execution you’ve got here, I mean are you factoring any macro impact one way or the other or you’re basically basing it on what you’re seeing right now in the market?

No, I think we’re basing it on two elements; on the licensing front that we talked about earlier, it’s pretty strong pipeline of company, valuing the technology, and we see a lot of new designs. We mentioned that in Asia we had four Chinese companies signup in their technology. There is a lot of money spent in R&D. We don’t see (inaudible), the holding companies from putting resources for new R&D projects in our space, both the baseband and the newer markets that we discussed, that’s on the licensing front. And, on the royalty front, I think we’re getting pretty strong indications from – we’ve been asked about that in the prior question or two, we are getting pretty good indications about big semiconductor companies. Our customers, Broadcom, Infineon, Spreadtrum and ST-Ericsson to some extent they are doing quite well. And I think that as soon as the market picks up both in Q2, that’s just a typical seasonality forced the 14% decline they had in Q1 that should be the case both in Q2 and continue in Q3, we should benefit from the royalty front. So from that type of aspect we are pretty optimistic but as usual and you know us for many years still conservative until we see these reports and until we see the dollars flow in, we’d take a more conservative approach. Daniel Meron – RBC Capital Markets: Understood, great. And then just again, since I joined in late, I missed third quarter and 2010 guidance. Can you just give me the top line and the bottom line headlines figures? We don’t need to go through the costs and all that, just the top and bottom line.

Sure. On an annual basis? Daniel Meron – RBC Capital Markets: For third quarter and for 2010?

Okay. For the third quarter it was $10.3 million to $11.3 million with bottom line non-GAAP at $0.12 to $0.14, the highest ever guidance we gave. On an annual basis, we tweaked our top line to between $41.7 million to $44.7 million, but generally the much higher bottom line of $0.48 to $0.52 per share non-GAAP. Daniel Meron – RBC Capital Markets: Great. This is pretty good numbers. Good luck. Thanks Yaniv and Gideon.

Thank you.

Thank you.

There are no further questions. I will now turn the call back to management for any closing remarks.

Okay. Thank you again for joining us today and for your continued interest in CEVA. We will be attending the following events in the coming months and invite you to join us there. The Oppenheimer Annual Technology, Media and Telecommunications conference, August 10 in Boston, and the Bank of America Merrill Lynch European Tech Conference, September the 1st in San Francisco. Thank you and good bye.

This concludes today’s conference call. You may now disconnect.