Yaniv Arieli – CFO Gideon Wertheizer – CEO

Anil Doradla – William Blair & Company Allan Mishan – Brigantine Matt Robison – Wedbush Securities Daniel Meron – RBC Capital Markets Doug Whitman – Whitman Capital

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 first quarter of 2010 and fiscal ‘10, a general outlook for 2010, optimism about our royalty revenue in 2010, optimism about our growth of the cellular and home entertainment market, in particular the LTE markets, and our position within them, our pipeline, customer production schedule 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 a strong growth driver for us; our success in penetrating new markets and maintaining our market position in existing markets; the effects of the intense competition within our industry; the effects of the challenging period of growth experienced by industries in which we license our technologies in; the possibility that our markets for the new 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 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 filings.

CEVA assumes no obligation to update any forward-looking statements or information, which speak as of their representative dates. With that said, I would now like to turn the call to Gideon.

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 fourth quarter and annual 2009.

During the quarter, we achieved revenue of $10.2 million, a 5% sequential increase over the third quarter of 2009, and 2% increase compared to the fourth quarter of 2008. This revenue figure is above the mid range of our previously stated guidance, and on par with our highest revenue figure in seven years, which was recorded during the third quarter of 2008.

Royalty revenue for the fourth quarter of 2009 was $4.8 million, a new record representing a 31% sequential increase over the third quarter of 2009, and 14% higher than our previous record high of $4.3 million reported for the fourth quarter of 2008. During the fourth quarter, we concluded 9 new license agreements.

Six of the agreements were for our CEVA DSP core platforms and software, two agreements were for our flash technology, and one agreement for our PLL technology. Geographically, three of the license agreements were in the US, five in Europe and one in Asia.

Target applications for the licenses concluded during the quarter primarily for LTE and 3G data cards and handsets, wireless machine-to-machine applications, broadband residential gateways, SSDs and SAS-based storage equipment. Our fourth quarter results were strong and we executed significant strategic event [ph] during the quarter which will have positive implication for our future, in particularly our expansion into the LTE market, the next-generation wireless technology.

The licensing agreement for the fourth quarter included one key agreement with a first-tier handset maker that adopted our calls for the first time and another with a key semiconductor player in the fourth-generation wireless space that selected our best-in-breed DSP, the CEVA-XC. On the royalty front, revenue for the quarter was a new record high, reflecting seasonal as well as continued market expansion in handset shipments as well as pickup in consumer products.

We believe that the current economic environment has stabilized, which can lead to incremental improvement in our business in 2010. Our licensing pipeline is solid and includes opportunities in the cellular and home entertainment market.

Also our royalty revenue, which consistently grew throughout 2009 despite the global downturn is anticipated to maintain this positive trend, driven by shipments of first tier OEM in the handset space and the introduction of our technology in new mobile entertainment devices. Before summarizing CEVA’s 2009 achievements, I would like to elaborate on two important fourth quarter license agreement we signed during the quarter, and our significant progress on the royalty front.

A key strategic and comprehensive license agreement was completed with the first Tier 1 handset OEM that selected our DSP core for its next-generation LTE product line. The customer who cannot be disclosed at this stage is going to broadly use our DSPs for the first time, displacing Qualcomm and Texas Instruments, the incumbent supplier.

It is interesting to note that for LTE development, the design complexities and the need for comprehensive technology coordination with the operators for both the handsets and the network requires that OEM to own the chip in the software design in addition to the handset design. While the LTE technology require the OEM to take an active role in the tube design, the more mature standard such as HSPA or HSPA plus chip design are handed over to semiconductor companies such as Broadcom, HP Ericsson or Infineon who have design capabilities and economy of scale to drive high volumes.

This landscape fits very well with CEVA’s growth strategy for two reasons. First, our customer base continues to grow and includes Tier 1 handset OEMs.

Second, as the LTE technology matures, we will be well positioned to license our proven solution to the SAP vendors. Another key agreement that was concluded in the fourth quarter was the adoption of our newest DSP technology, the CEVA-XC, by a leading semiconductor vendor in the fourth-generation cellular space.

This customer is now shipping fourth-generation chips and selected CEVA-XC for second-generation product that will incorporate LTE within a software defined radio, SDR architecture. The SDR is becoming a new practice in wireless basement architecture and to support multiplicity of cellular standard such as LTE, HSPA and CDMA to software on a DSP.

This legacy support is a must-have requirement since the LTE technology will eventually become a global standard across both the GSM and the CDMA network. The LTE technology dominance, along with the performance in SDR support, the CEVA-XC offers, will allow us to expand our market reach to the untapped CDMA ecosystem, which is currently dominated by Qualcomm.

On the royalty front, as I stated earlier, our royalty revenues of $4.8 million for the fourth quarter reached a record high in CEVA’s history. The substantial achievement was above our expectations and is due to our strong presence in two growing segment handset space, the lucrative 3G smartphone and the high volume ultra-low-cost phone.

We anticipate further growth in our royalty revenue in 2010, as Tier 1 customers roll out more and more of new high volume product enabled by our technology. In addition, we are seeing growing contribution from the mobile broadband segment, which is expected to become a more meaningful in volumes with products such as netbook, MID, smartbook, e-readers and data cards.

During the last quarter, we also experienced some recovery in consumer spending, which further contributed to our royalty income. Now, I would like to summarize the main achievements and progress CEVA made in 2009.

As we all know, this past year was terrible for virtually all economies and sectors around the world. But while the severe contraction in the first half affected our industry, we started to see stabilization and even reach of modest recovery late in the second half of the year, mainly to the cellular space.

Despite the challenging environment, we continued to execute our long-term plans and strengthened our technology base business position and value proposition. On the technology front, we managed to accelerate the development of our leading-edge DSP, the CEVA-XC and for the next-generation LTE for the software defined radio products.

We are also accelerating the release schedule of few other products which will soon be announced. On the business front, our best-in-breed DSP technology were adopted and being designed into products by customer at the forefront of markets for handset, data cards, front-to-front [ph], base stations, ebooks and netbooks.

Our worldwide market share in the baseband markets virtually doubled to 27% from 14% at the end of 2008. Based on the worldwide quarterly shipments in the third quarter of 2009 and 2008 respectively.

These figures do not represent the full potential of expansion of our technology into products of Tier 1 OEMs. Some of them recently started to ship products based on our technology.

We are extremely pleased with the recent adoption of our technology in the mobile broadband space, which is expected to be high volume market. On the financial front, we achieved important profitability milestone, strengthens our balance sheet and demonstrated superior positive cash flow contribution.

Our annual revenue declined by only 5% in a very challenging year. With that said, our non-GAAP operating margin increased significantly by 75% to 21%, and our non-GAAP net income and EPS improved 29% and 31% respectively to $8.7 million and $0.42.

We have generated positive cash flow of $16 million and concluded 2009 with close to $101 million in cash and marketable securities. CEVA Form 8-K we filed this morning for a reconciliation of our non-GAAP results to the GAAP results as well as other financial details.

Last but not least, all this outstanding achievement could not have been achieved without the dedication of our loyal and talented employees worldwide. I would like to take this opportunity to thank our employees and their families for their hard long workdays, nights, and weekends.

I would like to thank also to our customers, partners, and suppliers over the years for their support, business, and appreciation and wish for a successful 2010. Before handing over the call to Yaniv for financial and guidance, I would like to show you certain highlights in our markets and opportunities.

Worldwide mobile handset shipment in 2009 are forecasted to be nearly flat versus 2008 shipments according to recent Gartner reports. This is an improvement of the earlier projected that sales will decline up to 10% when compared to 2008.

Main contributor to the recovery are the challenging sale in Western Europe and the acceleration in local phone sold in emerging markets. For 2010, Gartner projects 9% year-over-year unit growth, the data point is in line with Nokia’s forecast for 2010 of 10% during the year.

ABI Research has an interesting observation with regard to the market potential of cellular technologies in the next five years. ABI forecasted shipments of cellular-based devices will nearly double the 2014 from 2009 units to a total of 2.2 billion units.

The reasons for this substantial growth are new categories of devices, such as cellular data cards, which are expected to grow by 40% annually and ultra mobile devices that are expected to grow by 67% annually. Another category that emerges from cellular technology is machine-to-machine, M2M.

According to a new research report from Berg Insight, in the next five years, the top end number of wireless M2M connection is forecasted to grow at a compound annual growth rate CAGR of 26% to reach 187 million connections in 2014. Longer-term, every device that can be connected will be connected to it.

Forecast range from tens of billions to 1 trillion connected devices. As we have stated in the past, an important growth segment for CEVA in the cellular market is the emerging market, namely Asia-Pacific, excluding Japan.

Per Topology Research Institute, the cell phone penetration in China is expected to reach 64% in 2010, representing a total of 1.2 billion users. In India, penetration is forecasted to reach 65%.

In 2010, for a total user base of 760 million. These penetration trend are expected to continue to grow in the upcoming years alongside with the completion of telecom construction projects in second and third tier cities.

These key data points I just highlighted, are here to emphasize our potential growth in the cellular market for the short and the long term. Our technology-based customer relationships in Tier 1 OEM adoption certainly put us in a very strong position to leverage these opportunities for the benefit of our shareholders for the coming years.

I will now turn the call to Yaniv for the financials and guidance.

Thank you Gideon. I will now review the results of the operations for the fourth quarter of 2009.

Revenue for the fourth quarter was $10.2 million, which was above the mid range of our guidance and similar to our seven-year high revenue figure recorded during the third quarter of 2008. Fourth quarter revenue was 2% higher than the same quarter in 2008, and 5% sequentially higher than the third quarter of ’09.

The revenue breakdown is as follows; licensing revenue was $4.7 million, reflecting 46% of total revenue, 2% higher than the fourth quarter of 2008; royalty revenue was $4.8 million, an all-time record high, reflecting 47% of total revenue and 13% higher than the fourth quarter of 2008. Fourth quarter royalty revenue was 31% sequentially higher than the third quarter of '09.

Service revenue was $0.7 million, which accounted for 6% of total revenue and down 41% compared to $1.1 million for the fourth quarter of 2008. The decrease is associated with fewer annual service renewal agreements compared to prior years due to expense reductions taken by few of our customers.

Quarterly gross margin was 91% in both US GAAP and non-GAAP basis. This represents two consecutive quarters of the same all-time record high gross margin.

Quarterly gross margin was 89% for the fourth quarter of 2008. As for the operating quarterly expenses, research and development expenses were $4.4 million for the quarter, including a $0.2 million of equity-based compensation expense.

Sales and marketing costs were $1.8 million including $0.1 million of equity-based compensation expenses, and our G&A costs were $1.5 million including $0.4 million of equity-based compensation expense. Total operating expenses for the quarter were $7.8 million, which included an aggregated equity-based compensation expense of approximately $0.7 million, which was slightly higher above the mid-range guidance due to higher investment in research and developments costs.

Total operating expenses for the fourth quarter excluding equity-based compensation expenses were $7.1 million, also slightly higher than the mid-range of our guidance and approximately 6% lower than the operating levels for the fourth quarter of ‘08. US GAAP operating margins for the fourth quarter of ’09 was 15% of sales compared to operating loss of 1% from the same quarter in ’08.

Non-GAAP operating margins for the fourth quarter of '09, excluding equity-based compensation expenses were 22% compared to 13% for the fourth quarter of ’08, a 69% improvement. Interest and other income for the fourth quarter of ‘09 was $2.4 million and included approximately $1.8 million of pre-tax capital gain from our equity divestment of GloNav to NXP Semiconductors.

On the tax front, we recorded a quarterly tax expense of $938,000, including $572,000 associated with the capital gain. US GAAP net income for the quarter grew 203% to $2.9 million and fully diluted net income per share grew 180% to $0.14 compared to $1 million and $0.05 respectively for the fourth quarter of ‘08.

Non-GAAP net income and fully diluted net income per share was $2.4 million or $0.11 per share, an increase of 53% and 38% respectively compared to the same period last year. Remember, these figures exclude approximately $0.7 million of equity-based compensation expenses and the $1.8 million of a pre-tax capital gain and its related tax of $0.6 million.

On an annual basis, and Gideon mentioned earlier, despite the economic turmoil in 2009, our financials showed strength versus ’08. In comparing 2009 with 2008, our total revenue decreased slightly by 5%, gross profit margins on a non-GAAP basis continued to improved to 90% from 89% in 2008.

Operating income margin on a non-GAAP basis increased 69%, from $4.7 million or 12% of sales to $7.9 million and 21% of sales. These non-GAAP figures exclude equity-based compensation expense for both 2008 and 2009 and expenses associated with our exit of the Dublin long-term lease agreement and restructuring expenses associated both in 2008.

And last, non-GAAP net income and diluted income earnings per share increased by 29% and 31% respectively to $8.7 million and $0.42 per share from $6.7 million and $0.32 per share in 2008. Other related data, shipped units by CEVA licensees during the fourth quarter of '09 were a record 121 million units, up 36% and 62% from the third quarter of 2009 and fourth quarter of '08 respectively.

Of the 121million units, 80 million units or approximately 66% are for handset baseband chips and reflect a significant increase from 61 million units reported in the prior quarter. Also of the 121 million units shipped in Q4, 99 million units were attributed to licensees currently paying royalties and 22 million units were shipped by licensees or under prepaid arrangements.

This compares to 89 million units shipped during the third quarter of '09, of which 75 million were attributed to per unit royalties and 14 million were attributed to prepaid arrangements. As of December 31st, ’09, 23 licensees were shipping products incorporating our technologies, pursuant to 31 licensing agreements, two higher than the prior quarter.

The two additions are newcomers for CEVA, one targeting the SSD market and the other targeting the Voice-over-IP PON market. Both markets are limited quantities for now.

Of the 31 licensing agreements, 27 licensees are under per unit royalty arrangement and four historical agreements are under prepaid arrangements. Next for the balance sheet, as of December 31st, CEVA's cash and cash equivalents balances and marketable securities reached a record high of $100.6 million, compared to $91.8 million at September 30th, 2009, or compared to $84.6 million at the end of 2008.

During the fourth quarter and annual 2009, we generated positive cash flow of approximately $8.8 million and $16 million respectively. These figures include proceeds of $3.6 million and $6.7 million of option exercises for the fourth quarter and annual 2009 respectively.

Our DSOs for the fourth quarter of '09 improved to 54 days compared to 61 days for the prior quarter. With regards to share buyback program, 106,000 shares remain available for repurchase and our headcount for the year is 184 employees.

I would now like to discuss the outlook for 2010. As Gideon discussed earlier, we believe 2010 will be a growth year in terms of revenues in particularly royalties, which should result in further sequential profitability growth, which has been our practice over the last five years on a non-GAAP basis.

For the full 2010 guidance, our total 2010 annual revenue guidance is expected to be in the range of $41 million to $44 million. Gross margin is expected to be in the range of 90% to 92%.

Operating expenses including equity-based compensation expense are expected to be in the range of $30.3 million to $32.3 million. Annual equity-based compensation expenses is forecasted to be approximately $2.4 million.

And annual operating expenses excluding the equity-based compensation expense will be in the range of $28 million to $30 million. This level of expenses is approximately $2 million higher compared to our non-GAAP 2009 overall expenses, meaning operating expenses and cost of revenue.

The expense increase is particularly associated with headcount increase in R&D, which should allow us to further leverage opportunities at LTE and HD video. We also recently increased our presence in China and Japan.

Last, approximately $1 million out of the $2 million will be associated with the currency exchange expenses as the US dollar is currently devaluated against the Israeli Shekel, the Euro, and the British Pound, which are the currencies under which we will be paying the expenses such as employee salaries. Interest income mix expected to be around $1.8 million for the year and our tax rate approximately 14%.

Share count for 2010 is expected to be approximately 22.2 million shares. US GAAP EPS is expected to be in the range of $0.33 to $0.39 per share and non-GAAP EPS, excluding the $2.4 million equity-based compensation expenses was forecasted to be in the range of $0.43 to $0.49 per share.

Our guidance for the first quarter of ’10 is as follows. Revenue is expected to be in the range of $9.9 million to $10.9 million.

Gross margin is expected to be 90% to 92%. Operating expenses including equity-based compensation is expected to be in the range of $7.4 million to $8.4 million.

Of the anticipated total operating expenses for the first quarter, around $600,000 is attributed to equity-based compensation. So, the non-GAAP operating quarterly expenses is forecasted to be $6.8 million to $7.8 million.

Our marketing expenses are expected to be slightly higher due to more marketing activities associated with our new product launches and conference participation in Q1 of ’10 as well as slightly higher R&D expense levels than 2009 following my earlier comments. Interest income is expected to be approximately $450,000, tax rate growth to 14% similar to last few quarters.

The share count for the first quarter in the range of 21.5 million to 21.9 million shares, and that would bring us to US GAAP EPS of $0.07 to $0.09 per share and non-GAAP EPS, excluding the $600,000 of equity-based compensation expenses are forecasted to be in the range of $0.10 to $0.12 per share. I will now open the floor for questions.

Hi, guys. Congratulations.

Just a couple of questions on the new, you know, handset vendors that you talked about with LTE. Is that for a baseband, or is that for application processors?

Baseband, Anil.

And so in your 2010 guidance, do you include some of that? And can you quantify how much of that will come from this Tier 1 handset vendor?

Hi Anil, this is Yaniv. I know the typical design cycle as we know in baseband is probably around a year to a year-and-a-half when those products get service side by the operators, different operators, I would guess this is a 2012 royalty opportunity, and of course the licensing revenue is something that we have recognized in Q4.

So, for a longer period –

Okay. And if I look at your whole year guidance, I mean, a year like 2009, at least on the earnings side, you guys grew north of 25%.

Based on your new guidance and kind of the midpoint, you know, how should I be viewing the guidance? I mean, is it just pure conservativeness, or because you don't have lack of visibility on the licensing front?

I mean, your guidance implies a growth which is lower than obviously '08 or '09. So, how should we be looking at it?

Yes, I think we will give second answer to the question, it’s probably more realistic and let’s all remember that we are coming out of a very difficult 2009. I don’t think anybody yet has good visibility of the ramp-up and how the economy, how the cell phone market trends will be other than general remarks about the 2010 in general, and therefore, I think we are taking both approaches.

First, there are many, many moving parts in our model as you know, lots of customers, lots of design wins, lots of potential wins, and we will have to evaluate them as we go along and have more data as we go along. The fundamentals are there for sure for growth, but the magnitude with quite a few of these different segments in the market, whether it’s baseband or consumer, we will evaluate on a quarter-to-quarter basis and update the guidance as we go along.

Great. And coming back to your $0.80 to $1.00, you know, kind of over the next couple of years target in earnings power, given that we're seeing an acceleration in market share on the low end market with the basebands from you guys, can you update us on that $0.80 to $1.00 guidance, and the – I think it was 35% to 55% of the worldwide market share for baseband.

Do you think that's going to move sooner, or you're kind of keeping it as it is over the next two years? How should we be looking at that?

Let me start. I am not sure this is a guidance, this is more of a different tool to help yourself and others to evaluate the opportunities for us in these different markets especially baseband over the next couple of years.

And I think that, that’s still in place, and the prospects of we have kind of based on new design wins that we just talked about in length, and the existing design wins which should continue to ramp up, especially in the lower end as you said, are helping us get comfortable that we are on the right track with our claim to customers. Gideon, do you want to –?

Yes, I mean, this is Gideon. One thing that I want to add to what Yaniv is saying.

At the beginning of 2009, we were saying that we are expecting a Tier 1 handset vehicle to get into production, complete the certification procedure which is a tedious one, and get into the market for production. At the exit of 2009, we made significant progress, meaning all these certifications, I would say at least three – I would say all the four out of the five largest ones that we are engaged with, and the certification is behind us.

And now, it’s a matter of rolling out mobiles, new mobiles that is now between the handset maker and operators or how these look like, what would be the volume. This has now become, I would say, automatic also.

And that’s a big difference from our standpoint. Things will go kind of be faster, but again, it’s now demand, supply issues.

Thank you very much, guys, and congratulations on a great quarter.

Thank you Anil, Thank you.

Hi, guys. A couple quick ones.

First, on the guidance for the current quarter, are you expecting royalties to grow in the quarter or will they be down with the consumer seasonality?

We did not receive most of the reports this time around, they were a bit late. So, we don’t have a full visibility of the quarter, but we do believe that they should grow modestly in Q1 compared to Q4.

I think that we have seen in Q3 shipments a little bit of and now we see with regards to a ramp-up from post-depression seasonality and Q3 was very strong. Most of the reports from the handset side that we are seeing so far are talking about a flat to mild modest growth in Q4.

So, I believe our royalties will grow, but slightly, and we don’t have the full visibility yet this quarter around, this time around.

Okay. So if they grow slightly, then it looks like the combination of service and licensing is roughly flat the current quarter?

Well, yes, more or less, overall as you know, the visibility in the licensing is limited to the pipeline which we have, which is quite healthy, but until you change your view, you don’t have the full, you don’t have a backlog in this type of business. So, the pipeline is strong, we are seeing a lot of interest from many companies and the way we are usually budgeting and forecasting the licensing side, it is more conservative.

Okay. And then if I look at the per unit royalty percentage for CEVA, it was about 84% for the year, and it was in the mid 80s for the whole year.

Should we assume that, that number goes higher in 2010, because you might have some prepaid agreements that exhaust, or is that something that will happen beyond 2010?

Again, it’s based on very specific product line, very specific customers. I believe that we have seen in the past because this list was longer many years, few years ago, and let’s try to target at least one of these players to get out of that list, and that could be our goal, but it all depends on the specific quantities of our specific product line.

Okay. So for now, I should assume it's roughly in the same range?

Yes, I think so.

Okay, great. That's it for me.

Thank you.

Thank you.

Hi. On the new Tier 1 licensee, did you mean to say that, that is a new licensee and/or a new user of your cores?

And should we continue to model rounding up to $0.05 a unit for the unit royalty? And then the last part of the question is the services have been in steady decline all year, and below last year.

And it seems – you mentioned the efforts by your customers to economize. How much more do you expect them to economize?

So, that's it for now.

Okay. Matt, its Gideon.

Let me take the first part and then Yaniv will comment on the ASP. The result of this strategic, this a new licensee, and I should say a new user of our technology – still not new.

This company will go and do this development, LTE development, I would say, year or year-and-a-half, and then it will go into production.

Okay. So – and they will organize sublicensing deals for semiconductor supply, or how will that work, do you anticipate?

No, but once they, I believe, once they go into mass production and LTE becomes two markets, they have their own suppliers, and they will basically follow these suppliers to stick with us.

So you'll get some follow-on licensing deals to work with those suppliers a year-and-a-half, two years from now, you expect?

That’s a plan, yes.

Yes, okay.

And Matt, on the ASPs, as you know, the mix of high end and low end products, right now we are comfortable when it’s $0.05. We had agreements on product lines, which are significant higher than the $0.05.

On the other hand, from the lower original cost market and the volumes there are much, much higher. So, I would say that again they would still to continue to monitor which basket it becomes more significant, the consumer or high end versus the higher volume and the low end.

So, for now, I would say the mix is fine. If it changes one to the other, we will know that on a quarterly basis and probably try to analyze that trend.

So, for now, we are comfortable with that, on the royalty side. And on the service side, you are right.

This is what we have experienced over the last year in many companies that have, they license our technology, will have a one or two-year mandatory support. Usually, that is a reasonable time for them to finish the development of the chip, and in the past, we have seen companies continue to get support in production and utilization of improving yield.

Today, when companies and customers are looking to save money in many areas, they will try to deal it internally on their own and to save the support fee that we charge annually. So, that would probably continue to erode.

And I would say, probably the impact of level of under $600,000 to $650,000 a quarter is something that we are for now comfortable that we will continue to monitor the overall environment and behavior with regards to our support revenue.

Okay. And I should congratulate you on your – put another $0.22 of cash on your balance sheet.

DSO declined to a pretty low level for you guys. Should we – is it reasonable to read into that you've got the linearity leaves something for you to close licensing wise in the first quarter?

No. Every quarter is a standalone story and a standalone quarter.

I think the DSOs are more not just a linearity, but also the maturity of the products that we have seen about few years ago. DSOs were higher because the technology was not deliberately or immediately within the quarter.

Some of it’s grown, now mature and you could deliver within quarter, the payment terms are much, much shorter. So, that is main aspect and element of our DSOs.

Okay, thanks a lot.

Thank you Matt.

Hi, guys. A couple of questions here.

First of all, was the OEM relationship that you mentioned on the LTE side, was this something that you guys had directly with OEM, or is it through the chip vendor that this relationship started?

Daniel, it’s Gideon. It’s directly with OEM.

Okay. And I'm just curious that did you guys market the solution around – trying to educate the markets around it?

Yes we market. I mean, getting leverage.

When it comes to LTE, the complexity and the investment required is in my opinion three or four times higher than 3G. Now, the OEMs are now – and we think these other way OEMs as well, are taking the extra role in developing the achievements, because they need not just to finish the – to have the chip, but also to qualify because we have (inaudible) to make sure that the network and the handsets are complying.

And this is something that for advanced technology like that LTE, the semiconductor are not or do not have the value. Today, they don’t have the skills doing it.

So, that’s the reason that in this particular example, the handset maker decided to do the development by themselves, to qualify, get into early production and I believe as time goes by, when the LTE volume will be above 100 million units for you. All these other semiconductor companies, Broadcom, Infineon, all these guys will step in and take you through the next level.

Got you. Can I understand from the complexity involved with the license agreements you charge more for the license agreement itself compared to your other licenses?

That’s usually the case. We will go to new technologies where, you know, where new technologies coming out, much more advanced, powerful, and we are able to have a higher ASPs and new technologies compared to older one.

Okay. And then just moving to the ASPs of – the royalties that you get, just trying to figure out if it was flat, slightly better or slightly down right here, I mean, for 2009 compared to last year, and how should we think about it going forward?

I think I don’t have in front of me on an annual basis. I checked in the last two quarters and it’s flat, it’s $0.05, could be the math quite easily offline as the numbers aren’t there.

I don’t see a – I don’t anticipate a big change in ASP compared to 2008. The mix in ’08 is probably more towards consumer or slightly high towards consumer.

2009 by far close to 66% to 68%. Our handset, we know and we heard another big player yesterday talking about the emerging market ramp-up and the low-cost market ramp-up is faster and that changes a little bit of the mix, but bigger volumes, and as we saw, overall higher royalties for CEVA.

Okay. And how far advanced are you guys with the ramp up going on with Nokia, both in the low end, low-priced handsets for emerging markets, and with the higher-end solutions as well?

And if you can just elaborate with additional places that the ramp up is needed to be fully reflected in your royalty streams.

Yes, you know, our habit is not to convey specifically about a customer or product line. I think that the overall trend is an important one, and I will leave it to you to do some of the homework of the well-known great design wins and public information that is out there.

For many years, Nokia went with TI only, quite a few different press release and product introduction happened in 2009, probably the later part of Infineon and Broadcom, SDE and VI CDMA has announced design wins with Nokia just at the end of November. There were 5 new models introduced by Infineon, and we will have to watch our customers carefully, but the potential there of course is huge, as Nokia still is Number 1 with shy of 40% worldwide market share, a big, big portion in ultra low-cost market.

Some of the comments that they have made in the last month or so are, I mean, quite robust about the lower end side of their business.

Okay. And then a last one from me – uses of cash – I mean, you have got $100 million.

I know that this question comes up. But just curious if there's any update on that.

If it's piling up, you know, it is quite impressive size of a cash pile compared to the size of the company. Any thoughts on that?

I do think that we have changed our thoughts with regards to that idea that we have been pushing in and struggling over the last couple of years, continue to make and build a profitable company which is sustainable in the longer term, this is what we have done. And of course, the positive side of it is you also generate a positive cash flow and a pretty significant amount.

We have the right ingredients for the next couple of years to take this company higher into the next notch and step with internal progress and not something that’s unique to buy or look for M&A opportunities. But that said, if you do find something that makes sense, it’s synergistic to our customer base or technologies, that is the probably the right use of cash within the licensing business model of journey, 90 plus percent gross margin versus 1% in the bank.

So, I think that’s still our goal, to try and see if something like that could be found. I don’t think this is something that is going to happen over the next, although on the short-term but if something pops up, we will look and see if it makes sense for us.

Okay, thank you. Congrats on the solid execution, Gideon, and Yaniv.

Good luck going forward.

Thank you.

Sure Daniel.

Congratulations

Thank you Doug. Did we lose Doug?

Can you hear me?

Back to yes. Yes.

Okay. Congratulations on a strong quarter.

And thank you for the strong results, again. You know, you grew $16 million year-over-year in cash.

And so, with tax rates going up, following up on the last question, has there been a thought much in consideration, and if not, would certainly urge you to think about if not stock buybacks or some dividend for the shareholders, because it looks like dividend rates may be going up next year. So it certainly would give or take $100 million is an impressive amount of cash where you might pay back some of the shareholders, long term shareholders with some dividends.

So, it's a basic point I just wanted to make.

Thanks Doug. This is a legitimate possibility of use of cash.

And we have discussed it internally already to the board, and I don’t know what the overall answer would be, but one of the possibilities of use of cash.

Well, it's pretty impressive you got $5 a share in cash, so congratulations.

Thank you.

Thank you.

Okay. And thank you for joining us today and for your continued interest in CEVA.

We’ll be attending two events next month, and we invite you to join us there. The first will be the annual largest Mobile World Congress in Barcelona, Spain.

That’s on the date of February 15th to 18th, and following that is the NASDAQ and Oppenheimer Joint 14th Annual Equity Conference in New York on February 23rd to 24th. Thank you and good bye.