* Q4 adj EPS $0.06 vs $0.02 forecast
* Q4 revenue up 1 pct to $38.4 mln
* Sees Q1 revenue $37-$40 mln, adjusted EPS $0.05
JERUSALEM, Jan 30 (Reuters) - Multimedia chip provider DSP Group expects a profit in the first quarter versus a year-earlier loss after fourth-quarter earnings topped estimates due to increased demand for wireless telephones.
Israel-based DSP makes wireless chips for cordless DECT phones and other consumer telecom products. Its voice over Internet chips are incorporated in four of six new phones sold by Panasonic for the office market while Germany's Gigaset also launched a new line of products based on DSP's VoIP chips.
Ofer Elyakim, DSP's chief executive, told a conference call of analysts on Wednesday that demand rose particularly in Europe, which had been weak for much of the year. He attributed the increase to a jump in cordless phones with Bluetooth connectivity of up to four different mobile devices.
These phones, Elyakim said, allow for higher sound quality on cellular networks and are suitable for homes without a fixed phone line. This category grew 65 percent in 2012 and ended the year with a 10 percent market share in the wireless phone sector.
"Our financial results for the fourth quarter ... demonstrated a return to operating profitability and solid execution in a challenging macro-economic environment and continued uncertainty in our core DECT market," Elyakim said.
Shares of Nasdaq-listed DSP were up 4.5 percent at $6.54 in morning trade.
DSP earned six cents a share excluding one-time items in the fourth quarter, compared with a 19 cent loss per share a year earlier. Revenue gained 1 percent to $38.4 million.
Analysts forecast DSP to have earned 2 cents a share on revenue of $38.2 million, according to Thomson Reuters I/B/E/S.
The company initially projected revenue of $35-$38 million but earlier in January DSP said it would exceed that estimate.
It forecast revenue of $37-$40 million for the first quarter of 2013, below $43.5 million a year earlier. It sees adjusted EPS of 5 cents versus a 5 cent loss a year ago.
Analysts forecast flat EPS and revenue of $38.2 million in the first quarter.