DSP Group (Nasdaq:DSPG) posted $4.04 million net profit for the fourth quarter of 2001, beating estimates by $420,000.

However, in Q4 2000, the company netted 54% more, $8.74 million.

Earnings per share dropped to 15 cents, 52% less than in the parallel quarter, when EPS was 31 cents, but 2 cents higher than the forecast 13 cents.

The $29.2 million revenue exceeded forecasts. Investment bank Salomon Smith Barney had expected $28.5 million revenue. Revenue for the parallel quarter in 2000 was 7% higher at $31.425 million, and in the third quarter of this year revenue was 18.5% higher, at $35 million.

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Revenue for 2001 grew to $114.67 million, $670,000 more than forecast, and 5% more than revenue for 2000, which came to $109.5 million. Net profit for 2001 dropped to $21.9 million, 56% less than for 2000, when profit came to $49.835 million, but $500,000 more than forecast.

EPS for 2001 dropped to 79 cents. Although this is by a cent more than forecast, it is 56 cents less than EPS for 2000, which came to $1.74.

The results for 2001 include gross profit of $57.6 million, generated by the sale of shares of affiliated company AudioCodes (Nasdaq:AUDC). In addition, the company had two one-time expenses worth $14.1 million.

Net profit and EPS excluding these items would have come to $29.798 million and $1.04 respectively for 2001. Excluding capital gains and the unusual items, net profit involves a 26% drop, and EPS involves a 24% drop.

Chairman and CEO Eli Ayalon said that the extra $26.6 million in cash, and the firm's ability to meet operating expenses, enabled it to retain growth. He said that the company believes it will continue to post profit, and has decided not to cut R&D expenses in order to maintain its position in both fields of business. Ayalon added that DSPG's long-term planning, which among other things included supporting R&D, eroded 2001 profit, compared with 2000.