{ "docId": "019dd923-622b-71dc-a6d9-aa56741b6a55", "docSlug": "fade76df1897", "documentTitle": "DSP Group, Inc. (DSPG)", "authorId": "03_Starboard_Value", "authorName": "Starboard Value", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2013-05-13 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 19, "pageCount": 50, "prevPage": 18, "nextPage": 20, "slideType": "villain_critique", "function": "name_villain", "density": "dense", "nDataPoints": 1, "notes": "The slide uses a classic activist investor 'strategic critique' structure, highlighting a specific management decision and providing three distinct reasons for skepticism.", "elementsJson": [ "headline_text", "bullet_list", "numbered_list", "paragraph" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622b-71dc-a6d9-aa56741b6a55/19", "deckHref": "/decks/019dd923-622b-71dc-a6d9-aa56741b6a55", "deckJsonHref": "/decks/019dd923-622b-71dc-a6d9-aa56741b6a55.json", "deckAnchorHref": "/decks/019dd923-622b-71dc-a6d9-aa56741b6a55#slide-19", "components": [ { "bbox": null, "kind": "callout", "text": "While developing a chip rather than licensing HDClear may or may not be the right answer over time, we believe it is critical to have independent Board members who can assess the risk-reward of each option with an open mind, so that HDClear has the highest chance of success over the long term.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-78b7-702e-962f-8ac126884401", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.84, "x": 0.08, "y": 0.21 }, "kind": "list", "text": "We believe that DSP’s differentiating factor for its HDClear solution lies in its noise cancellation algorithms. DSP has stated that HDClear has “robust and powerful noise cancellation algorithms” and that it “drastically lower[s] Word Error Rate (WER).” However, rather than license this software, DSP is attempting to build its own voice processing chip for the smartphone market, which is significantly more expensive. To that end, DSP announced on February 26, 2013 that it is licensing CEVA’s audio core to develop its own voice processing chip. While other companies have chosen this route, there are still significant questions and challenges with this strategy over the long term, including:", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "12952636-64a2-41ff-b0a8-f6f11fb06b42", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.28, "w": 0.81, "x": 0.11, "y": 0.47 }, "kind": "list", "text": "1) High end mobile smartphone companies have continued to integrate all of their discrete chips onto a single System on Chip (SoC) and may choose to incorporate the noise cancellation software algorithm into their own SoC rather than use a separate voice processing chip (similar to what Apple, Qualcomm and others have done). 2) There are a number of important technology features beyond noise cancellation that are necessary to create a competitive voice processing chip, which mobile phone companies and other chip providers already possess, so DSP may not have an advantage in these areas like it has with noise cancellation. 3) Developing a chip entails substantial costs, and Audience, a competitor to the HDClear solution, did not achieve operating profit until 2010 when revenue reached almost $50 million.", "attrs": null, "subkind": "numbered", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "21fc5458-459d-4761-9aaa-f1aecce0452e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.84, "x": 0.08, "y": 0.77 }, "kind": "paragraph", "text": "While developing a chip rather than licensing HDClear may or may not be the right answer over the time, we believe it is critical to have independent Board members who can assess the risk-reward of each option with an open mind, so that HDClear has the highest chance of success over the long term.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "872d86ab-d9fc-42e4-beef-f8cc1a84d0dc", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“robust and powerful noise cancellation algorithms” — DSP", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-78b7-702e-962f-8c4fc86bd677", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.84, "x": 0.08, "y": 0.09 }, "kind": "title", "text": "We Question DSP’s Decision To Develop A Chip for Mobile Phones Rather Than License Its Solution Over The Long Term", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "087cc35e-4466-417f-ace0-6cb0bdaba1f8", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "strategic-critique", "slug": null, "matchId": "5c5b2ca9-c180-434c-9292-be43a4e719d4", "evidence": "The slide follows a standard activist structure of identifying a management decision, providing evidence against it, and concluding with a call for board oversight.", "confidence": 0.9 } ], "arcBeats": [ { "to": 36, "from": 6, "beatId": "81006f69-47c8-46d7-990f-1be8bffe15d7", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Agitate", "beatSlug": "problem-agitate-solution-agitate-make-it-worse", "evidence": "Slides 6-36 expose contradictions and critique DSP Group's management and board.", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [ { "to": 36, "from": 6, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "461286b5-1828-4e59-8f68-0c15c27a66ab", "evidence": "The deck repeatedly highlights the consequences of not changing the board and management.", "position": 0, "objective": "The cost of inaction is further underperformance and value destruction.", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.7, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }