At this time I would like to welcome everyone to CEVA’s first quarter 2011 earnings conference call. [Operator instructions.] Thank you. I’ll now like to turn the conference over to Mr. Richard Kingston, director of marketing and investor relations. Please go ahead sir. Richard Kingston – Director of Marketing and Investor Relations: Thank you. Good morning everyone, and welcome to CEVA’s first quarter 2011 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 first quarter and will provide financial guidance for the second quarter and fiscal 2011. I will start with 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 second quarter and fiscal 2011, market data from Strategy Analytics, Inc. herein, optimism about our customers’ product pipelines and market penetration; optimism about our products including CEVA XC and MM3000, projections relating to smart phone expansion and trends related to internet-enabled HDTV and 3D TV, optimism about our ability to penetrate new markets beyond the cellular-based band market, as well as the positive impact on our business of these various factors. 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 ability of our products incorporating our technologies to achieve market acceptance, the effect of intense industry competition and consolidation, the possibility that markets for our technologies may not develop as expected or that products incorporating our technology do not achieve market acceptance, our ability to timely and successfully develop and introduce new technologies, 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 filings. 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. 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 first quarter of 2011. Our revenue for the first quarter was $15.1 million, a new record. These results were 42% higher than the first quarter of 2010 and a 16% sequential increase. Royalty revenue for the first quarter of 2011 was an all-time high of $9.2 million, representing an 85% increase over the first quarter of last year and a 23% sequential increase. Earnings per share on a non-GAAP basis were $0.23, 92% higher compared to last year and 21% higher sequentially. During the first quarter we concluded seven license agreements. Four of the agreements were for our DSP cores, platform, and software, and three agreements for our SATA/SAS product line. Geographically, three of the license agreements were in the U.S., three were in Asia, and one was in Europe. Target applications for the licenses completed during the quarter are primarily 3G and 4G baseband processors for handsets and infrastructure, smart grid, and SSD drives. During the first quarter we [sailed past] our financial targets, driven by market share expansion in the mainstream 2G and 3G segments and new strategic licensing agreements. Shipments during the quarter represented an all-time record high for the company as customers shipped in excess of 234 million units, of which 213 million were baseband processors across all cellular segments including low-cost feature phones, advanced smartphones, and tablets from branded Tier 1 OEMs. On the licensing front, we signed three new CEVA-XC agreements during the quarter. Two of the agreements we made to two untapped markets for us, base stations and smart grid. Our new base station customer is a Tier 1 OEM in Asia, a…

[Operator instructions.] And your first question comes from Suji De Silva of ThinkEquity.

Hi guys. Nice job on the quarter. The mix of handset in the units has gone up significantly. When do you expect diversification to bring the non-handset part back into the mix more aggressively? Gideon Wertheizer – Chief Executive Officer: The mix is changing because we are kind of in a hockey stick when it comes to the baseband. The baseband is growing much faster. We do have designs and even some of them are very encouraging. We have game consoles, new game consoles that just came out to the market and doing very well. We have application processors. I mentioned the Broadcom application processor. This is evolving and expect it to catch up. But the baseband is by far growing faster and that’s encouraging for us.

And then on the license pipeline, does that continue to grow here and have you seen any impact on closure rates from Japan or impact in the handset unit market? Yaniv Arieli – Chief Financial Officer: I’ll take that. Overall, as we mentioned on the call, we see a very healthy pipeline of design activity from not just the traditional baseband but rather from new market segments as well. Just last quarter we signed 2 brand-new markets, DSPs to brand-new markets for us. So I think that we are looking at a healthy pipeline, a healthy backlog of deals. I don’t think we’re going to change at this point in time our licensing guidance. We have said in the past, and we’re comfortable with somewhere between the $4-5 million, but I think the environment that we’re in is toward the higher end and it’s a healthier environment than it may have been in the past. So I think this is some flavor that we could add on the licensing environment.

And any impact from Japan? Yaniv Arieli – Chief Financial Officer: No, not as much as we know for now. We had some discussions with our key customers. They all claim that the production is progressing as planned today and they were not able to identify any specific issues or concerns. It’s an overall macro concern, but for now we haven’t seen any direct impact, not in the licensing or business opportunities nor from the royalty.

Your next question comes from Joseph Wolf of Barclays Capital. Joseph Wolf – Barclays Capital: Just wanted to ask two quick questions. One is sort of maybe a re-do of the first question which is if you look at the royalty revenues as a percentage of sales, does your guidance keep that kind of steady at this all-time rate of about 61%, or do we expect a little bit of movement? Or which way do we expect that movement to be in the annual guidance? And then just Yaniv, if you could give us a comment on the receivables trends? They dropped significantly. Looks like there were very good collections. Are we at a new level of normal? Or how should we look at receivables for the rest of the year. Yaniv Arieli – Chief Financial Officer: Let’s start with the second. No, I think it was a little bit of abnormal. I think we’ll get back to the 40-day-ish. These are the financial target and be more reasonable. This quarter, specifically, or the first quarter, was not fully back-end loaded like the IT business usually is and therefore some of the deals that we did manage to close in the beginning of the year, a big portion of them also we were able to collect the money within the same quarter. So it was a very nice achievement I believe, but it’s not something that we will see as the model going forward. With regard to your other question, I think we regressed this sometime in the past. When you look at the more mature IP companies that are out there, which have been much longer than CEVA has, which are a bit longer in age, I think that the thumb rule is probably a third to two-thirds, meaning…

Your next question cash flow Doug Whitman of Whitman Capital. Doug Whitman – Whitman Capital: Congratulations on the great quarter. I had a question on – when you took over the company you had over 100 days’ accounts receivables and you talked about how as licensing grew receivable days would come down. And obviously you grew the licensing basically close to 100% year-over-year, but you also grew as well on the other side of the business, which is normally typically fairly end of the quarter. Could you touch a little bit on how the receivable days are so low, and what we should expect for the next quarter? Yaniv Arieli – Chief Financial Officer: Sure, yeah. I was just asked about that. I think that 7 days is out of the ordinary I would say in this specific quarter. Some of the deals, significant deals, were signed in the earlier stage of the quarter and this is why we were able to collect the money. I would presume to look at the last couple of quarters this was around the 40 days to 46, 47 days. I think this was something that we should expect going forward. I would be happy to show a more 7-day type of quarter but I don’t think it’s that realistic. It would be nice not to have back-end loaded quarters but more front-end loaded. But this is really the merits of the cash flow and the accounts receivable and to that add the fact that the more royalty, the easier collection it is, because this is an automatic – somewhere between net-30 to net-45 days payment terms and the bigger the royalty piece is the better payments we have. And as you can see we have no issues with any of our customers on non-payment. Doug Whitman – Whitman Capital: Okay. We’ll hold you to the new standard. [Laughter.] Yaniv Arieli – Chief Financial Officer: I won’t take the challenge, not yet at least.

Your next question comes from Matt Robison of Wunderlich Securities. Matt Robison – Wunderlich Securities: I’ll throw in my congratulations too. Phenomenal results. Gideon, can we get a feel from you how you gauge your penetration into the traditional industry leaders in the mobile device business? And then talk a little bit about how the non-mobile business, at least from a royalty perspective, was this year versus the last couple years. Gideon Wertheizer – Chief Executive Officer: Okay. So let me start with the mobile. The recent evolution and progress in standards make the DSP processors much more complex than in the past. When it comes to 2D there were plenty of ways to do it. There were a lot of different DSPs. When you jump and you come to the LTE, and you start dealing, as I mentioned in the prepared remarks, when you need to deal with basically multi-standards, you have to support all the LTE and all the legacy, and going forward, LTE Advanced, you need to have different architecture. And that’s something that we figured out three years ago, and now we come to the customer both in the infrastructure side and on the handset side, and show them that they can use this technology and basically do with one platform things that otherwise they would [inaudible] to do it with two or three different hardware blocks or even chips in their system. So I hope this answers your question about the penetration. Matt Robison – Wunderlich Securities: Actually, it doesn’t answer it at all. What I’m wondering if you can talk about what percentage of the phones that are shipped by these traditional very large suppliers of phones such as Nokia or Samsung you think you’re in at this point. You can give me a…

Your next question comes from Gary Mobley of Benchmark. Gary Mobley – Benchmark: I just wanted to touch on some of the prepaid dynamics. Are there any residual prepaid royalties in the quarter? And then as well do you still have roughly one prepaid agreement still in place? Yaniv Arieli – Chief Financial Officer: Yeah, you answered the two questions right. Prepaid is not an issue anymore, so we don’t have any prepay agreements this quarter and as we mentioned last quarter we still have one under prepaid, very old deal, insignificant, which we are not breaking out as you saw any more because this was an old deal, an old [inaudible], no issue anymore. Gary Mobley – Benchmark: Okay. Of the seven license deals signed in the quarter were any of those with licensees CEVA’s never dealt with in the past? Gideon Wertheizer – Chief Executive Officer: Of course. Four or five-ish. Gary Mobley – Benchmark: And last question for me, have you seen any change in the competitive dynamic among various third party DSP intellectual property licensers? And I guess what I’m really specifically pointing to is the deal MediaTek signed with Coresonic. Does that deal in particular preclude CEVA from getting in there and then as well might you see feature competition from third-party IP vendors like Coresonic? Gideon Wertheizer – Chief Executive Officer: There is competition. I would say [inaudible] competition in the case you mentioned, Coresonic. Coresonic is a startup company with unproven technology. From time to time companies like MediaTek, which has a strong NIH insight, want to take the risk and take technology and try to do something for themselves. Probably they are getting all sorts of benefit for that. We are speaking with MediaTek in different respects and I’m not too much concerned about specific cases where companies take small companies with unproven technologies and try to use it. Could be.

Your next question comes from Anil Doradla of William Blair. Brian Nugent – William Blair: Hi, it’s Brian Nugent in for Anil. Just wondering if you can comment on the overall MM3000 design traction, when we might expect some licensees there. And then I guess is there any way to compare that, the level of interest that you’re seeing in the MM3000 to the XC ramp that’s now two years later after XC? You’re starting to see some real volumes there in terms the designs. Is that the kind of timing we should expect for the MM3000? Gideon Wertheizer – Chief Executive Officer: Yes, we expect to get similar traction for MM3000 as with XC and the early indications that we are getting, both from customers and looking at the competitive landscape, these technologies like XC have a technology advantage. The fact that we are combining 3D video, HD videoconferencing, and vision, and what is called image [inaudible] or processing, in one platform, is appealing and we are supplemented with [inaudible] to make it attractive to customers. The technology is still in late-stage in development. I mentioned that the second half of this year, the release to the market, will make it available. We are already doing quote [inaudible] with customers. We showed it in the recent Mobile World Conference. We showed it in [inaudible]. By the end of the year it would be available for [life] although I wouldn’t say by the end of the year but [inaudible] the second of this year it will be available for licensing and we have to see license income. Brian Nugent – William Blair: Okay, and on both the XC and MM3000 can we expect, once we start seeing volumes there, a higher royalty rate? And is there any way to quantify…

Your next question comes from Daniel Meron of RBC.

Congrats on the very good performance of you guys in this quarter and the last several years. The first question, Gideon I missed earlier the market share that you mentioned that you have right now. Can you just repeat that? Gideon Wertheizer – Chief Executive Officer: 41%.

And then can you break it down for us between the Chinese market versus your share of the overall handset market versus say the Chinese market? Is there a way to segment that? Gideon Wertheizer – Chief Executive Officer: No, we don’t do it. We never broke it down. I’ll tell you Daniel, it’s a bit of a misconception about the Chinese market. When we say Chinese market we don’t mean that it’s phones that are being done for China. In China there are tons of ODMs. Some of them are pretty large. Some of them even branded like [inaudible] and Huawei that are basically manufacturers like Nokia. They don’t have their brand. Some of them are firms that are formed in China. Some of them are even coming to the U.S. So we don’t break down because for us it’s indifferent. We see the overall market both for handset and mobile broadband and that’s it.

Okay, that’s fair enough. And then maybe just taking a step back and looking at the overall opportunity. Again, I’m sorry if I missed that earlier on the call. But how do you look at the total opportunity on a long-term basis? Can you quantify? Is there a target number that you guys are aiming for in the various end markets that you’re going after? What could be feasible? And when you say that you think that you guys will have a better position in the LTE market, can you provide some quantification to that, or at least provide us with a little clearer view of who else could be playing in that space against you? Gideon Wertheizer – Chief Executive Officer: If you ask specifically about LTE, currently we have 14 new designs that re running on LTE. The LTE landscape and the fact that you have new form factor that LTE could be integrated in – I’m not saying even tablet, but consumer devices. There could be tons of new players that will use LTE as a feature, meaning integrating their chip. So it’s hard for us at this stage to come and say this is our target. There could be a situation that the market will [inaudible]. There won’t be one Nokia that has now 30%, but in the past was 50%. The landscape will not necessarily be the same. So we are now focusing on getting design wins in LTE. We have built something there and we are getting. Some of them are known to us, customers that are using us already for 2G and 3G. Some of them are relatively new customers, some of them even in [inaudible] market, smartgrid infrastructure. These are also LTE, but the application is different.

And then if you could just relate to the potential or total addressable market that you guys have in various markets, if you can quantify it for us. And how far along that path you are. Are we basically looking for more of those licenses that you’ve gained to get there? Or is it just a matter of those devices getting more traction? Or a little bit of both? Gideon Wertheizer – Chief Executive Officer: It’s both. It’s getting traction, and I mentioned it. Take Broadcom for example. They are expanding. Last year they basically doubled their volume versus 2009. Spreadtrum tripled their volume. Infinil [inaudible] now. 80% also [inaudible]. They are expanding, and they see – only really Qualcomm that give them a fight or in front of them to expand and that’s a fraction in the existing market, and it will continue. In the licensing, that’s a new cycle. Now we are getting to the infrastructure. This is a brand new customer [inaudible] that we are now getting wins. Yaniv Arieli – Chief Financial Officer: I think Daniel to summarize this, and we have it in our [inaudible] presentation slide. The addressable market for 2015 is north of 4.5 billion units for us. This is up from 2 billion when you looked a year or two ago, just the potential seller-based only. So the busier the market we’re looking into, the more we get into new markets, the larger the [inaudible] from unit perspective is going to be. That does not take into account machine-to-machine and the smartgrid network, which could be in the hundreds of million if not more.

Okay. And just this last one from me. Can you provide us with a little bit more color on I think it’s been quite a few months ago, almost six months since Intel acquired Infineon’s communication division. Have you seen any changes in the dynamics? Are you seeing yourselves, as Intel intensifies its position in this space, are you able to leverage that opportunity into additional markets beyond baseband? And I think you’ve alluded to that in one way or the other during this call and previous calls as well. Yaniv Arieli – Chief Financial Officer: Yeah, of course. We’re not Intel’s spokesmen, so in this question you need to ask them and they’ll know what technology they are using for the baseband, because that’s easy. But all in all there’s opportunity for us there as we mentioned, to add to tablets, laptops, and desktops in the future instead of having a 3G or in the future maybe 4G dongles you’ll be able to integrate like Wifi, like Bluetooth, onto the same Intel devices, [inaudible] of the same Intel devices. That is our take on it. And that opens up a new market for us other than just the traditional cellphones that Infinil was active it. So that’s true for the Samsung Galaxy. That’s true for the iPad, many, many other devices. And of course Intel based processor that will be sold to different applications. When and how, this is more for Intel to quantify.

And our final question comes from Daniela Ventrone of Matrix. Daniela Ventrone – Matrix: Hi guys. Congratulations for the good set of results. Couple of questions from me. The first one is on ASP trend in royalty shipments. I remember you talking about ASP going down this year and next, so I was wondering whether you could give some clarity. And the second one is the number of CEVA core handset shipments in the quarter. Thanks. Yaniv Arieli – Chief Financial Officer: The second one is the number of core shipments? Daniela Ventrone – Matrix: Yeah, just handset shipments. Yaniv Arieli – Chief Financial Officer: Okay, out of the 234 million, 213 million were for baseband. Daniela Ventrone – Matrix: Is it just handsets? Yaniv Arieli – Chief Financial Officer: Oh, I see what you mean. No, out of the 213 million, that’s handsets and connected devices. The fact that a quarter ago we started to add that together is just because from a technical reason that when a chip is sold to a specific phone, we don’t know if it’s going to end in the tablet version or in the phone version, or what have you. So because there’s no specific breakdown of their end product, now everything that is base valuated, whatever market it could go into, it could be machine-to-machine in the future as well, we count that under one basket of connected devices. So we just don’t have any way to break it down anymore because the tablets and the smartphone market are just tied and are essentially the same. That’s from that technical question. On the ASP, what exactly? You’re right that in the past we said that there will be some shift to lower ASP because of the market dynamics and the new markets which happened the last two quarters for us, which is the local Chinese market specifically. But with that said, we also have new customers, customers that came out from prepaid, customers that are slowly ramping up different consumer or application processors that have higher ASP. It’s a blend and a mix of answers but the bottom line is that we keep it pretty much as in the prior quarter even slightly better, but I’m not sure if this is yet any sign for the future. You just have to monitor it because there are so many moving parts in the royalty payers. Daniela Ventrone – Matrix: Just one last question if possible. Can you give us the number of licensing agreements at the end of the period and licenses shipping, licensed products? Thanks. Yaniv Arieli – Chief Financial Officer: Sure, we have 29 different customers, which are shipping a product. This correlates to 38 different licensing agreements. Some of our customers did license, for example, [inaudible] later in [inaudible] and both of these are in production and selling to different markets within this segment, so licensing agreements represented by 29 active shippers.