Starboard's Latest Letter Clearly Demonstrates a Lack of Understanding of Our Business; Do Not Let Starboard Distract You From the Facts
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Do Not Let Starboard Distract You from the Facts
The facts are clear — don't be distracted by Starboard's misleading statements:
DSP Group'sstock is one of the top performing stocks in our industry over the last 12 months and year-to-date
DSP Grouphas completed six consecutive quarters of operational improvements measured across all key metrics, including a return to GAAP operating profitability
DSP Grouphas a clear, concise growth strategy and is on track to meet its strategic goals
- DSP Group Board nominees are diverse and have significant strategic, operational, financial and public board experience in our areas of focus and in the places where the Company operates
Do Not Confuse Our System-on-Chip ("SoC")
It is astonishing that Starboard, which is seeking majority representation on our Board, does not understand the difference between our "fabless" System-on-Chip ("SoC") peers and the competitors listed in our
Additionally as we have previously noted, Starboard's suggestion that we re‐enter the licensing business and compete with CEVA on DSP core licensing further demonstrates their failure to understand our business. It also contradicts their own claim that the Company spends too much on R&D, as a typical R&D expense level for an IP licensing company is 35% to 45% of revenues, as compared to 26% in our business model. Moving to an IP-licensing model would require that the Company spend millions of dollars and invest years of development effort to port our entire software suite to a new core.
Starboard Ignores the Benefit that the CEVA Spin-Off Created for Long-Term Stockholders
In their latest attempt to mislead investors, Starboard states that "over a 10-year period, DSP's stock has declined by 63.1%." This statement blatantly ignores the value created when
Without the Acquisition of NXP's DECT Business, the Precipitous Decline of 2.4GHz and 5.8GHz
In its latest letter, Starboard criticizes the Company's acquisition of NXP's DECT business, which occurred in 2007 and was the largest acquisition in
|DSP Group's 2.4GHz & 5.8GHz as a % of Revenues 2003-2012|
|Year||2.4GHz & 5.8GHz as a % of Revenues|
This decline was not the result of loss of market share to a competitor; it was the result of a shift from 2.4GHz and 5.8GHz cordless products to the superior DECT license frequency. This shift accelerated after the
Many companies that have a product declining from 85% to 7% of sales cease to exist. DSP Group could have faced a similar fate, if not for the foresight of the Board in acquiring NXP's DECT business. As a result of the NXP deal,
Starboard's Claims that
Starboard asserts that the
Starboard selectively includes options as a means of economics ownership, when it is convenient for their distorted point of view. In Starboard's latest letter, they include options and equity in their discussion of the economic interest of CEVA's Board members. They omit option ownership, however, when discussing
Also to further align ourselves with shareholders, the Company announced yesterday the adoption of a resolution to establish a minimum stock ownership policy for members of the DSP Group Board of Directors and the Company's senior management, in accordance with corporate governance best practices.
Starboard Again Fails to Disclose What We Believe to be its True Intentions: a Fire-Sale of the Company
Starboard again fails to disclose what we believe to be the real reason why the activist hedge fund is seeking majority representation on
Starboard rejected this settlement proposal—a proposal that, based on our review of prior Starboard settlement agreements, offered them a better deal than they have ever received in other negotiated resolutions. The settlement proposal would have given Starboard ample access to the Board and influence in its decisions. We believe that Starboard's rejection of this offer is proof that they want more.
The Board's Leadership Has Demonstrated Its Commitment to Improving Profitability and Enhancing Stockholder Value
The Board has remained firm and consistent when it comes to making tough decisions that are in the best long-term interests of all the stockholders. The Company's current Board has also demonstrated flexibility, creativity and a willingness to adjust and adapt when new opportunities arise to create durable stockholder value. A prime example is the Board's recognition that the Company needed to compete in the mobile market, if it is going to continue to grow and prosper. The development of the DBMD2 chipset powered by
In closing, we encourage all shareholders to look through our White Paper, "Setting the Record Straight," for the facts. This White Paper is available to all shareholders and can be viewed at http://www.sec.gov/Archives/edgar/data/915778/000119312513233442/d543608dex991.htm
We urge all stockholders to vote their GOLD proxy form to re-elect the Board's nominees and to help build long-term value for ALL stockholders.
Even if you have previously returned a white voting instruction form to Starboard, you have every right to change your vote and support your board's nominees using the GOLD voting instruction form. Only your latest dated, validly executed vote will count.
If you have any questions or need assistance voting your shares, please call our proxy solicitor
Thank you for your continued support.
Important Additional Information
The Company has filed with the
Certain Information Regarding Participants in the Solicitation
The Company, its directors and certain of its officers may be deemed to be participants in the solicitation of the Company's stockholders in connection with its 2013 annual meeting. Information regarding the names, affiliations and direct and indirect interests (by security holdings or otherwise) of these persons can be found in the Company's definitive proxy statement and proxy supplement for its 2013 annual meeting, which were filed with the
Certain statements in this white paper qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations and
CONTACT: Investor Relations
Christopher BastaDirector of Investor Relations, DSP GroupWork: 1-408-240-6844 Cell: 1-631-796-5644 firstname.lastname@example.org Daniel H. Burch, CEO MacKenzie Partners, Inc.Work: 1-212-929-5748 Cell: 1-516-429-2722 email@example.com Paul R. Schulman, EVP MacKenzie Partners, Inc.Work: 1-212-929-5364 Cell: 1-203-856-6080 firstname.lastname@example.org Media Relations Mike Sitrickand Jeff Lloyd Sitrick And CompanyWork: 1-310-788-2850 Jeff_Lloyd@sitrick.com Mike_Sitrick@sitrick.com