{ "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": 32, "pageCount": 50, "prevPage": 31, "nextPage": 33, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 0, "notes": "The slide uses a bulleted list to detail governance concerns and strategic missteps.", "elementsJson": [ "headline_text", "bullet_list" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622b-71dc-a6d9-aa56741b6a55/32", "deckHref": "/decks/019dd923-622b-71dc-a6d9-aa56741b6a55", "deckJsonHref": "/decks/019dd923-622b-71dc-a6d9-aa56741b6a55.json", "deckAnchorHref": "/decks/019dd923-622b-71dc-a6d9-aa56741b6a55#slide-32", "components": [ { "bbox": null, "kind": "callout", "text": "Given the significant overlap between the Board and legal counsel of DSP and CEVA, we are concerned whether the ultimate decision to license technology from CEVA for DSP’s HDClear solution was compromised by the potential financial benefit to these individuals arising from their relationship with CEVA.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-78b7-702e-9630-e6eea2b835ab", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.09, "w": 0.84, "x": 0.08, "y": 0.72 }, "kind": "list", "text": "Given the significant overlap between the Board and legal counsel of DSP and CEVA, we are concerned whether the ultimate decision to license technology from CEVA for DSP's HDClear solution was compromised by the potential financial benefit to these individuals arising from their relationship with CEVA.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "029383a1-67cc-4d24-b72e-50bbf9201f03", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.09, "w": 0.84, "x": 0.08, "y": 0.62 }, "kind": "list", "text": "Based on our analysis, we have serious questions as to DSP's decision to build a chip with CEVA's core rather than license the technology as a software algorithm given the substantial cost associated with developing the chip, and the move toward high end smartphone companies to integrate discrete chips onto a single SoC.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2c2f7070-122f-4489-9570-4e128e294cef", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.09, "w": 0.84, "x": 0.08, "y": 0.52 }, "kind": "list", "text": "It is also important to note that if DSP chose to build its own audio core or license a core from another company, or chose to license its noise cancellation technology to smartphone companies rather than build a chip altogether, DSP would not have needed to enter into a licensing agreement with CEVA.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3a63dfe0-df7d-4eb5-bf93-f0457fb0f161", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.84, "x": 0.08, "y": 0.27 }, "kind": "list", "text": "As is customary, we would assume that DSP is paying both an upfront license to CEVA as well as an ongoing royalty stream.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "46d66260-6bb5-4fac-ae34-ec26e1ca9488", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.84, "x": 0.08, "y": 0.32 }, "kind": "list", "text": "Nowhere in the Company's latest proxy, including in the related party transactions section, does DSP explain the potential conflicts of this licensing deal, including: The fact that two of DSP's current Board members are also on the Board of CEVA. The fact that DSP's outside legal counsel is on the Board of CEVA.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "620da83c-90ba-4a41-b822-89312d9553c5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.84, "x": 0.08, "y": 0.45 }, "kind": "list", "text": "Further, nowhere in the proxy is any potential conflict between the two companies addressed even though there was an apparent need for a five year noncompetition agreement when CEVA was spun off.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "906d8ccc-d7a7-4fb5-9296-19c0d6e3f8a3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.84, "x": 0.08, "y": 0.21 }, "kind": "list", "text": "On February 26, 2013, DSP announced that it is licensing CEVA's audio core to couple with DSP's HDClear solution to develop its own voice processing chip for mobile phones.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "aed30e48-b16b-4715-8c45-cbc6e5cdf3da", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.84, "x": 0.08, "y": 0.09 }, "kind": "title", "text": "DSP's Decision to Sign a License Agreement With CEVA to Develop its Own Chip For HDClear Raises Even More Questions", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0017808f-1c55-496b-a0fd-c8b3d9cd1834", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "governance", "slug": null, "matchId": "304f5107-3883-4e91-97c9-5107113b1b52", "evidence": "The slide explicitly discusses board member and legal counsel conflicts of interest.", "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 }