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CEVA, Inc. (NASDAQ:CEVA) has had a great year. The company just reported third-quarter results that easily beat estimates. CEVA also concluded ten new licensing agreements. Over the past two months, this year's estimates have increased 30% to 13 cents per share. Earnings are expected to grow 69% next year to 22 cents per share.

CEVA engages in designing and licensing programmable digital signal processor [DSP] cores DSP-based subsystems, application-specific platforms, and a range of software components primarily to the embedded communications and multimedia markets.

Its portfolio of programmable DSP cores primarily include CEVA-X, scalable VLIW-SIMD DSP architecture; CEVA-Teak, a 16-bit fixed-point general-purpose DSP core; CEVA-TeakLite, a single multiply-accumulate 16-bit fixed point DSP core; and CEVA-TeakLite-II.

In early-November, the company reported strong third-quarter results. Total revenue for the third quarter of 2007 was $8.7 million, an increase of 11% compared to $7.9 million reported for the third quarter of 2006. Royalty revenue for the third quarter of 2007 was $2.2 million, an increase of 55% over $1.4 million for the third quarter of 2006. Revenue from services for the third quarter of 2007 was $1.2 million, an increase of 30% compared to $1.0 million reported for the third quarter of 2006.

Net income for the third quarter of 2007 was $1.1 million, an increase of 226% compared to net income of $0.3 million for the third quarter of 2006. Diluted net income per share for the third quarter of 2007 was $0.05 per share, an increase of 150% compared to diluted net income of $0.02 per share for the third quarter of 2006. Analysts expected $0.03 per share.

During the third quarter, CEVA signed a strategic licensing agreement with one of the Company's largest customers who extended their use of CEVA-X DSP cores to products for wireless applications. In addition, one of Japan's largest, branded, original equipment manufacturers licensed the CEVA MM2000 multimedia platform for its development of next generation surveillance camera equipment. This license agreement represents a key design win for CEVA in the fast growing surveillance market as the underlying technology transitions from analog to digital IP network-based systems.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated:

The third quarter of 2007 was another solid quarter for CEVA in terms of expanding the licensee base, increasing the royalty revenue and building the pipeline. Our royalty revenue surpassed the $2.0 million mark for the first time in the Company's history, and we received during the third quarter the first royalty payment from one of the leaders in the 3G chipset market who is now shipping products incorporating our CEVA-X DSP cores in high volumes. We also are pleased with the recent traction our customers that incorporate our DSP core technologies have generated with leading mobile handset manufacturers.

Only one analyst covers the stock, but the earnings estimate picture looks good. Over the past two months, this year's estimates have increased 30% to 13 cents per share. Earnings are expected to grow 69% next year to 22 cents per share. The past two quarters have produced an average surprise of 125%. The stock has a nice ROE of 14%, much higher than the industry average of 5%.

Source: Strong Year For DSP Designer CEVA