This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

DSP Group Issues Letter To Shareholders Regarding Potential Proxy Contest

Dear Fellow Shareholders,

We are writing to let you know about an important development that is likely to have a significant impact upon DSP Group and its future.

Over the past twelve months, your board and management have been actively taking steps to enhance shareholder value. We have restructured the company, cut expenses, resumed non-GAAP profitability, generated $10 million in cash flow from operations, continued our stock buyback program (which returned $8 million to shareholders during 2012) and focused on new growth initiatives that fully leverage the company's core strengths in voice processing and short range wireless communications.

These actions, which were unanimously supported by your board of directors, have resulted in significantly improved operating results and have positioned the company for long-term growth and success. These measures and results have also been recognized by the investment community, as DSP Group has seen its stock price increase by almost 20% over the last twelve months and almost 30% year-to-date, outperforming the Russell 2000 Index, PHLX Semiconductor Index and the S&P Information Technology Index, as well as the stocks of well-known semiconductor companies as Texas Instruments and Broadcom.

Despite this progress, Starboard Value, a New York-based investment advisor which owns approximately 10% of the company's shares, has threatened the company with a proxy fight for control of the board unless its demands are met. While DSP Group's board and management are doing everything possible to avoid a costly and distracting proxy contest, the board does not believe that Starboard's demands are in the best interests of the company or its shareholders, customers, or employees.

As you may be aware, on April 3, 2012 we entered into an agreement with Starboard. This agreement allowed Starboard to nominate two directors, while DSP Group agreed to the resignation of a then-serving director. Starboard also agreed to a standstill clause that expires 90 days prior to the anniversary of 2012 annual meeting of shareholders ( i.e. mid February 2013).

Now that the standstill period has expired, Starboard has made demands, which if accepted could effectively give Starboard control of the company, despite Starboard's ownership of only approximately 10% of the company's stock. Even though Starboard already has two nominees on your board, Starboard is demanding extra seats on the board, significant representation on all board committees, an effective majority on the compensation committee, which would include half Starboard nominees and a Starboard chairman, as well as the formation of a new strategic committee, which would also include half Starboard nominees and a Starboard chairman. We are confident that our current board is highly experienced, diversified and qualified and that there is no need to change the composition of our board.

2 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.81 +28.74 0.17%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs