(Adds Q2 forecast)
TEL AVIV, April 27 (Reuters) - Multimedia chip designer DSP Group swung to a loss in the first quarter as revenue fell on weak demand for digital cordless home phone products.
Israel-based DSP, which makes wireless chips for cordless phones and other communication products, posted on Wednesday a loss of 8 cents a share in the quarter excluding one-time items, compared with earnings of 9 cents a share a year earlier. Revenue fell 27 percent to $27.7 million.
Analysts were forecasting a loss excluding one-off items of 11 cents a share on revenue of $27 million, according to Thomson Reuters I/B/E/S.
Ofer Elyakim, DSP’s chief executive, said the company achieved record revenue from new products of $12.8 million, up 43 percent on the year, driven by its HDClear chip for mobile phones.
“However, this progress was more than offset by softer demand for cordless products, where revenue declined 49 percent year-over-year,” he said.
An inventory correction cycle should be exhausted in the second quarter, when a gradual improvement in the cordless phone market is expected, he said.
In a conference call with analysts, DSP forecast second-quarter revenue of $35-$37 million and adjusted EPS of 8 cents.
Analysts are forecasting adjusted EPS of 6 cents on revenue of $34.6 million, according to Thomson Reuters I/B/E/S.
“We believe that continued growth of our new products will be the key to driving overall growth and enhancing profitability going forward,” Elyakim said.
In March, DSP Group confirmed that its HDClear chip, which allows for “always-on” voice recognition while suppressing background noise, was a component in the new Samsung Galaxy S7 phone. (Reporting by Tova Cohen, editing by Louise Heavens)