Good morning and welcome to the CEVA Inc First Quarter 2012 Earnings Conference call. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded. I’d now like to turn the conference over to Richard Kingston. Please go ahead.

Thank you and good morning everyone. Welcome to CEVA’s first quarter 2012 earnings conference call. I’m joined today by Gideon Wertheizer, Chief Executive Officer of CEVA and Yaniv Arieli, Chief Financial Officer of CEVA. Gideon will cover the business aspects and the highlights from the quarter and Yaniv will then cover the financial results for the first quarter of 2012 and will provide financial guidance for the second quarter and fiscal 2012. I’ll 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 second quarter and full year of 2012, market data from Wireless Intelligence, Strategy Analytics, and Informa Telecom incorporated herein; optimism about our ability to expand our addressable licensing markets, strength of the 3G and LTE markets, recovery and stability of the 2G markets and our ability to capitalize on the trends; predictions that Nokia and the impact on our business as well as our projection of the number of CEVA powered devices in the future. The risks, uncertainties and assumptions include the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for our success in penetrating new markets and maintaining our market position in existing markets, the ability of products incorporating our technologies to achieve market acceptance, the ability of intense industry competition and consolidation, global chip market trends; the possibility that our 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, 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’d now like to turn the call over to Gideon.

Thank you, Richard and welcome everyone. We’re pleased with our solid start to the year, which was driven by strong licensing revenues. Total revenue for the first quarter was $15.1 million, in the high-end of our guidance range and flat compared to the first quarter of 2011. While we experience some expected toughness in the Royalty growth, which were discussed during the fourth quarter earnings call. These were partially offset by better than expected licensing revenues of $5.1 million, resulting from important agreement with key and existing – key new and existing customers. Royalty revenue was $9.1 million which is in line with the first quarter of 2011. Yaniv, will further elaborate on our financial achievement, including our recent share buyback activities and we will also provide you with our second quarter 2012 guidance and revised annual 2012 guidance. Based on a few trends which I will elaborate on shortly, we’re taking a cautious approach at this time and revising downward our annual 2012 guidance. During the first quarter we concluded eight new license agreements. Six of the agreements were for our CEVA DSP cores, platforms and software, and two for our SATA/SAS technologies. Geographically three of the license agreements were in the U.S., four were in Asia and one was in Europe. A new DSP agreement with both new and existing customers addressing smartphone opportunities in all of this market key growth segment, from local smart market 3G handset to the premium LTE phones. The targeted peers of our DSP within smartphone extend beyond baseband into advanced voice and audio processing that has become distinctive and differentiating features recently. These clearly illustrate the strength of our diversified product portfolio, enabling us to generate solid licensing revenues and future royalty stream from incremental DSP socket. On this point, I’d like…

Thank you, Gideon. I’ll start by reviewing the results of our operations for the first quarter of 2012. Revenue for the first quarter was $15.1 million, close to the high-end of our guidance range reflecting a flat year-over-year comparison. The revenue breakdown was as follows. Licensing revenues were $5.1 million reflecting 34% of the total revenue and similar to the first quarter of last year. Royalty revenue was $9.1 million, reflecting 60% of our total revenue and comparable to the first quarter of last year. Service revenue was $0.9 million reflecting 6% of total revenue, 29% higher than the first quarter of last year. Gross margins were 94% to 95% on U.S. GAAP and non-GAAP basis respectively, again, very similar to the same period a year-ago, on a non-GAAP basis, excluding approximately $50,000 of equity-based compensation expense. U. S. GAAP operating margins for the first quarter this year decreased slightly to 30% of sales from 32% last year. The non-GAAP operating margins for both the first quarters of 2012 and 2011 were at 39%. This GAAP net income for the first quarter increased by 4% to $4.9 million and fully diluted net income per share increased 5% to $26. This compares to $4.7 million and $0.19 respectively for the first quarter of 2011. On a non-GAAP net income basis, it increased 6% to $5.9 million as compared to the same period last year. And our non-GAAP fully diluted net income per share increased 4% to $0.24 per share as compared to the same period last year. Other related data, shipped units by CEVA licensees during the first quarter 2012 was 278 million units, down 6% for the first quarter of 2011, and 18% higher than the first quarter of last year. Of the 278 million units shipped, 254 million or…

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Gary Mobley of Benchmark. Please go ahead.

Hi, guys. Regarding your market share for cellular basebands, what is your estimate for the just reported quarter and when might we start to see that market share inflect upward, I am assuming you’re going to be trending below 40% throughout the year, but just; is it all -- the market gains is it all contingent on Nokia’s transition to CEVA based 3G basebands looking out into fiscal year ’13?

Hi, Gary. Let me start to note the market share as for this last quarter is record high, its 46% of the worldwide baseband sold based on the Strategy Analytics data that we have been giving over the last couple of years. So it is quite high and we do still believe that its going to continue to be in the -- above 40% for sure over the next – throughout this year, no reason for it to loose and to go down and I’ll get Gideon to give you a little bit more flavor about the Nokia related section of the question.

First of all, the shortfall or the problem that they have -- Nokia has in the smartphone actually we're taking benefit. As we said in the call, we're not planning to be at the Nokia smartphone but when they loose smartphone share, say for Samsung and they are loosing share in the smartphone to Samsung, we will directly benefit from that. So the 3G is growing, I mean we see it. I mentioned in the call that in the key customers we see 2X a sequential growth in the 3G. The Nokia 2G that’s something that we need to take time and wait. First of all you don’t have everyday situation where a gorilla like Nokia is loosing share dramatically. Now there could be two scenarios; one scenario is that they will get their acts together and fix the problem that they have and they mentioned -- they mentioned the lack of touch device and then how things will be fixed immediately and then from going back to the market share will grow because of they’re going in the 3G. The other scenario that they will start loosing the momentum there and the share will somehow or the left over Nokia somehow will be split between whoever the [routine] Widebook’s OEM, then its helpful for us, we will benefit but we don’t know exactly who will bear because MediaTek can take some, Spreadtrum can take some, MStar – Spreadtrum, MStar are our customers. So this is something that we don’t know.

Okay. And getting a point of clarification, I know you generated growth east from about 1 billion units in 2011, and you mentioned 1.7 billion forecast, I just didn’t get the timeframe for that.

We say three years. Within three years we believe that we’re going to be at the 1.7 billion.

Okay. And last question for me; regarding audio and voice processing I am assuming your main competition there is Audience and is there a royalty component for these types of licensing arrangements similar to cellular basebands?

It’s a bit higher, because this goes into a smartphone. Audience is – it’s not really a competitor because Audience is a chip company and we're an IT company and they’re not – eventually they are not working with us but the customer, I mean, the customer that I mentioned in the call eventually will compete with Audience and there was another customer a quarter ago that also will compete with Audience.

By the way Gary, this is a new customer that Gideon mentioned in the U.S., it’s a new customer that has never used our technology before.

All right, thanks guys.

Thank you.

The next question comes from Suji De Silva of ThinkEquity. Please go ahead.

Thanks. Hi, Gideon. Hi, Yaniv. So with the shared record level, can you talk about the trends to disaggregate those between 3G share and 2G share what the trends there are for you guys?

Well, you know the 3G share is something that we're just started and we're encouraged about what Broadcom said yesterday that they are, basically surplus -- the 3G revenue surplus the 2G revenue, so that’s -- we have few customers -- key customers that are now taking significant share at Samsung. Now in 2G basically, for us 2G is kind of a baseline, meaning we don’t anticipate too much movement in terms of volume or share loss. We still have the opportunity, there are some opportunities for our customer to capture more share for MediaTek. There are some opportunities to go to – there are some growth synergy and it’s like moving to smartphone alert. The challenge in the 2G and I mentioned this in the call is the price erosion. Now this will change because the market itself is changing from feature phone to smartphone and all of them, all of because our customer are moving towards smartphone and this carries a higher ASP and eventually higher royalty for us.

Okay. And as we look ahead to Nokia 3G, well in 3G ramping up in 2013. How competitive is their platform do you think when it comes out versus the indigenous China offering?

Well, it all comes to how Nokia will deal with the mobile phone segment. They are competitive in terms of supply chain and the capabilities to do phones. When you go to the mobile phone segment, people -- I wouldn’t make that distinction, this is a feature phone and this is a smartphone. What Nokia is doing it in the 3G is literally a smartphone. They make a touch device, once they have the touch device they will max it to the internet, they have everything and they have a powerful platform to go the market, the CS-40, the CS-30 and dementedly the new coming; these are very powerful product. It looks to me that they are busy with the smartphone now and just don’t take resources to switch; it’s – I mean, this is our perception. But you can’t ask this Broadcom, we're relying on what they are saying.

Okay. Thank you.

Thank you.

The next question comes from Jay Srivatsa of Chardan Capital Markets. Please go ahead.

Yeah, thanks for taking my question. Gideon, you’ve talked about some of the newer markets the Auto market, the TV markets, Set-Top Box. Can you give us some sense on what your cycle is in terms of getting some meaningful penetration there and what are some of the challenges in terms of displacing some of the incumbent solutions that are present in those products?

Well, when it comes to the whole market, the platform that we are having there is audio, and the vision and imaging platform there multimedia. We are – these are early days still. We are in much more advanced stage when it comes to the mobile space. In the home and specifically the Smart TV – in marketing we have the right product, but these are early days to be specific.

Okay. You mentioned the ISP erosion in the 2G market which has prompted you to lower guidance for the full-year, in China specifically. There seems to be a sense that a similar type of erosion could occur in the 3G space as well in China. So what -- as you look forward to your prospects in terms of gaining more traction from some of the handsets in China, well how do you see the landscape playing out in terms of your own royalty revenues from there?

Hi, let me try to help you out, its Yaniv. When we look at what MediaTek’s CFO said about the low-end of 2G market, he said that a week a so ago that he now anticipates 25% to 30% erosion versus only two months ago which he mentioned somewhere around the 15% to 20% for 2G and we're specifically talking about 2G. So this is something that was not anticipated by us nor by bigger players like MediaTek even a month or two ago. And this is something that we will see and this is the main aspect that we've been cautious about and explain that this is one of the reasons of lowing especially the second half royalty associated with our big market share and success in the 2G space worldwide. So this is just input that we received from some of the big players in the space, I am not sure this includes and is true for all the players, but most likely it has a significant or can have a significant effect. When we talk about this low-end 3G and EDGE, still the pricing could be twice as more expensive including the royalty contribution to us. So although you’re absolutely right, but over time when this market evolved and the volume evolved, but right now in China you have maybe 10% to 14% smartphones and the rest, the bulk of it is not, when that continues to increase then the pricing as well will go down, but still starting point there is 2X more than where we are at 2G. So its more of a tradition period for us, specifically in the Chinese market, through worldwide for 3G and this is the way we see it, and it didn’t expand the more EDGE based and the more feature phone, touch screen, picture rich phones in China then our contribution is still with the same 1.3 billion devices it will be higher.

Thanks, Yaniv. Thank you.

All right. Thank you.

The next question comes from Anil Doradla of William Blair. Please go ahead. Anil Doradla - William Blair & Company: Hey, guys the guidance that you have provided for the fiscal year, can you walk us through the degree of conservativeness that you’ve baked in, its about what 7.5% on the revenue and about 10% on the EPS. Do you feel that you’ve baked in enough conservativeness based on trends and based on your visibility, any color on the licensing front and royalty side would be helpful? Thank you.

Sure. Let me start with the licensing, you know our comfort zone for licensing that we have been quite successful was expected for a pretty long period of time, its somewhere between $4 million to $5 million and when we say that we have a strong licensing either execution or a pipeline we are referring more to the high-end of that guidance. So at least for the near future for Q2 we did say that we believe that our licensing pipeline is strong and based on the product introduction that Gideon explained, I think we have one of those best and more advanced product portfolio for every segment of the market, not necessarily baseband anymore, but totally a different market and when we talk about that, to also to take us to a stronger play in the second half. So I would say somewhere between in our comfort zone plus would be what we have in mind for the rest of the year is to try to execute in the licensing. And … Anil Doradla – William Blair & Company: Sorry, sorry -- go ahead.

Okay, that’s the picture in the licensing. The royalty that’s -- it’s a little bit easier in the shorter run and then a little bit more tougher on the going forward. And then if you look at the five biggest OEMs that we put just recently last week or two reported there a shipment -- overall shipment. Looking at Samsung the biggest in volume is minus 13% sequentially the shipments from Q4 to Q1, and remember our royalties for Q2 represents Q1 shipments. So Samsung was down 13%, Nokia was down with the problems that we explained 27%. Apple was down 5%. LG was down 23%, and RIM was down 21%. If I do an average we're talking about 17% sequential shipment decline in Q1. Our forecast for Q2 is slightly better than the active analysis, but it’s more or less very close to it. So Q2 it’s a little bit easier to explain and that is mainly because of very strong negative seasonality in fact in Q1 shipments among which Nokia was probably the dominant aspect of it. And for the second half of the year, I think we mentioned its price erosion and it’s the lack of ramp-up or smaller ramp-up for Nokia offset by very strong ramp-up by Samsung and HTC and some new players. Anil Doradla – William Blair & Company: Great. Now, Yaniv would licensing revenues grow year-over-year in 2012?

We’re not there yet. We're not there yet, I would kick in probably at very similar levels as last year for a model perspective and if we do better then we’ll be happy to announce, but for a model I think you could take perhaps to slightly lower. Anil Doradla - William Blair & Company: Thank you very much.

Sure. Thank you Anil.

The next question comes from Joseph Wolf of Barclays. Please go ahead.

Thanks. Just with regard to the stock buyback that was down in the quarter, the pricing that you did there was higher than the current stock price, I am wondering the inclination of the board or management to continue on the 1.6 million shares or whether you’ve still been buying back stock in April, would be my first question.

Yes. Thank you, Joseph. We're on the 10b-18 plan, and then as soon as the window opens we could be active and as we mentioned because the average price was higher for what we have executed in Q1 we have the full concession of the board to continue to be active on the big existing plan.

Okay. And then, I guess that, with all the licensing activity and the -- I guess, there was some commentary you made on the base stations. Are any of these expected to produce any sort of revenue beyond licensing or I guess what's the timing of anything in terms of the base station or a real opportunity with some of these multi-DSP kind of opportunities. And then I guess, just taking a step back a lot of circling around in the futures on the smartphone. If you look at that as the, is the royalty and licensing 2G, 3G story the same for all of them or I assume most of the licensing right now is completely moved, well its obvious to have 2G, but what's the percentage of the licensing is moving beyond or do you see moving beyond handsets?

Okay, they’ll take one step at a time. The base station market it’s a licensing, although I believe we have one customer that our -- probably with the exchange and certify and it will be in production pretty soon. I don’t – I cannot give you exactly the volumes, but it’s ready for production. It really takes – if you may know it takes more time – the design cycle with telecom type of recruitment is larger, but usually license fees are (indiscernible) higher [income operative] market. Now, the second question or the big move …

Percentage of 2G versus 3G, 4G.

2G I agree with you.

The licensing.

Licensing, yeah, I don’t think they’re almost fairly (indiscernible).

No, I don’t -- 2G is more like now a cash cow. People are taking the old design, upgrade them to cost reduction, upgrade them to a smartphone design that use the same engine as they use, most of the design are for 3G and LTE, I mean, the licensing.

Okay, but is there a difference between, I mean, I guess you mentioned it with Nokia, but is there any difference between feature phone versus smartphone or is that sort of coming together at the customer-base with very little distinction for you – for CEVA at this point?

On licensing front?

Yeah, on the licensing – just – can you tell anymore what’s the difference is or is it all coming together?

No, no, there are differences. People that are getting into this space have really taken a month or year and they create (indiscernible) multiple version of the chips, feature phones, smartphone etcetera.

I think, Joseph, maybe what could help you, I mean even if at the end of the day you see a nice touchscreen phone with feature, you don’t know exactly if to call it a feature phone or smartphone, but size will determine – is to get a (indiscernible) and I think that the pricing is related to OEM positions it, if it’s a feature phone or a smartphone will be a much higher rate at the end of the day and that will be a much more expensive chip, baseband chip or absent baseband chip compared to a simple 2G phone. That’s the way probably to differentiate it. And as long as they’re selling and even with the more feature phones today, then the chip prices and the content, then (indiscernible) contribution would be higher.

Okay.

Regardless how the market …

Yeah, regardless how the market actually calls it a feature phone or a smartphone.

Okay, thanks. That’s helpful. Thank you.

Thank you.

The next question comes from Daniel Meron of RBC Capital Markets. Please go ahead. Daniel Meron – RBC Capital Markets: Thank you. Hi, Yaniv and Gideon. A couple of questions, first of all, I understand the reasons driving the lowered outlook for the year, what gives you the confidence that you guys will be able to integrate into 1.7 billion units, three years out, what is based on, and if it’s a repetitive question, please excuse it, you may because I might have missed some of the commentary earlier. Thank you.

Well, the revised guidance that we did has nothing to do with market share loss or change in the landscape. We’re going into 3G space with that effect. The Nokia 3G which was supposed to take place this year should move to next year, but Nokia is a company that essentially will do something, I don’t know exactly what will be their share, but they will do. But there are tons of other design wins in the 3G space. Just to give you an example, because I don’t recall all those examples of feature phones, (indiscernible) but I recall Spreadtrum in the late press release, they’re speaking about 200 design wins for their 3G chips or (indiscernible). These are the things. So that’s the 3G. And a little bit more color on how we got to 1.7, I’ll use the Strategy Analytics forecast for the next couple of years. This is the same data point that we compare every quarter, our market share in baseband, look at the current player that are in the industry today, our customers, some of the different segments we can explain in the market, pretty build it from bottom to top with the existing players in the market, and this is how we got to the 1.7 billion devices. Daniel Meron – RBC Capital Markets: Okay, I understood. So, now to the cash, so you’ve got the buyback going on, and – again, I might have missed it earlier, but do you still trying to expand two additional areas or adjacent areas in kind of through M&A? Is that something to also look for?

Yes. We’re experiencing also with the person now that we've recently dealing with it. You know that we made investment in Gesture Technologies, we’re exploring other (indiscernible) full of all those ideas that we’ve and we’ll keep doing it, but try to find the right things for us to do here. I mean we’re not the last definitely the revised guidance is not something that accelerated. Daniel Meron – RBC Capital Markets: Right. Okay, I understood. Thank you, good luck.

Thank you.

Our next question comes from Matt Robinson of Wunderlich Securities. Please go ahead.

Yeah. Thanks for taking my question. So the working assumption be that we wait for (indiscernible) or whatever it is, Nokia calls their product line of falls Asha before we can expect to see the transition to 3G there?

I don’t know, Matt, because what we’re following here is the things that Broadcom is saying because right now they’re the one that – are open and saying that they’re going to go into the 3G mobile phone segment. I don’t know – we don’t know exactly the pattern. The only thing that we know that they’re pushing it for 2013. I know that there are other customers that are working with Nokia in 3G, but again, we’re operating – we’re making assumption that there is no difference here. We will push it for next year. In 2G, as I said before it all comes how they get their act together, they…

So the thing is that Asha stuff is TI-based I think and it seems to be sound pretty well and my question is if they are content with that, it could be quite a delay and the feedback – the impression I get is that they’ve formed the price on the 2G and their volumes are starting to pickup there, but we’ll see if that’s sustainable for more than a couple of years.

Yeah, by the way Matt, I want to just emphasize here, we’re focusing on Nokia, because that is one of the opportunities for Broadcom, the Intel and probably other vendors because Nokia has moved as we all know it’s a multi source in the next couple – few years ago it was the fairly -- it would have been helpful for other clients, their customers in the baseband were robust.

– :

On the 3G, right?

Overall – yeah, yeah, overall. Let’s break it down 2G, 3G if you can?

Yeah, when it comes to 3G, Samsung is – they’re going very well. We’ve a significant overview and nice share there and sequentially it’s growing very fast, it comes from multiple directions, one of them, it is among the smartphone where Samsung take share for Nokia smartphone. And that’s 3G now, I mentioned in the prepared remark in terms of new design while we repeat these are big names in the 3G, their volume (indiscernible). And Matt, take also into consideration you have the normal positive seasonality in the second half of the year. So it’s a regular business model for us, just a lower starting point because of Q2 and the rest we experiencing and I’m trying to absolute result.

Your HTC design is – there appears to be somewhat of a break there with Intel’s, is that something that you think is significant for you this year?

No, well, I’m sorry, we’re running out of time, I just got a couple more questions, so on the licensing, is it principally the new scope in the application processor that gives us confidence for the licensing, for last year?

The – we spoke on the licensing agreement that we signed in the audio side, this is behind us. We were speaking about new opportunities that we have for licensing for Q2 – for Q2 if we will carry, that’s a good pipeline, we are on track. These are still opportunities, so which we will not speak about the use of that, but its still audio, its still LTE these are the things that we’re stronger.

Okay. Can you just give me the CapEx and depreciation?

Yeah, no change, it’s about a 100,000 cores that’s what has been in the past.

Okay. Thanks a lot.

Thank you, Matt.

Our last question comes from Daniel Gelbtuch of Cantor Fitzgerald. Please go ahead.

Hey, guys. Just want to know if you can give us some update on where you see the competitive environment and I guess, relative to the XC4000 and if you see your competitors turning into customers over the next year Q2?

The XC4000 is a step-up versus the competitors. When it comes to competitor in our space it was just recent lively report that did the markets where we’ve 90% market share. But its not a matter of competitors that risk all position, its more a matter of how we expand our licensing on those that have used also with in-house DSPs and one of them will definitely Qualcomm. And this is we’re working on that, trying to convince them, they don’t have Qualcomm for example does not have XC4000 like processor and they’re exposed to it.

Okay. Thank you very much.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Richard Kingston for any closing remarks.

Thank you. Thanks again for joining us today and for your continued interest and support for CEVA. We will be attending the following upcoming conferences and events and invite you to join us there. J.P. Morgan Global Technology, Media and Telecom Conference on May 15th in Boston. Barclays Capital Global Technology, Media and Telecommunications Conference on May 23rd in New York. Sterne Agee Technology Conference on May 24th, in New York and RBC Capital Markets Communications Technology and Semiconductor Investor Day on June the 5th in Boston. Thank you very much and good bye.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.