UPDATE 1-Ceva Q1 profit tops expectations, sees drop in Q2
* Q1 EPS ex-items $0.16 vs $0.13 forecast
* Sees Q2 EPS ex-items $0.03-$0.05 vs $0.13 forecast by analysts
* Sees growth resuming in H2 on sales of 4G handsets in China (Adds Q2 outlook, details)
TEL AVIV, April 30 (Reuters) - Israeli mobile chip designer Ceva Inc reported higher first-quarter net profit and revenue that beat analysts' expectations as it secured new customers but it forecast a weak second quarter on lower royalty payments.
Ceva said on Wednesday it earned 16 cents a share excluding one-off items in the first quarter, compared with 13 cents a year earlier while revenue rose 13 percent to $13.7 million.
Analysts had forecast Ceva would earn 13 cents on revenue of $12.2 million, according to Thomson Reuters I/B/E/S.
Ceva forecast second-quarter revenue of $10-$11 million compared with $12.8 million a year earlier due to a 10-15 percent drop in royalty revenue from the first quarter. It sees diluted earnings per share ex-items of 3-5 cents compared with 15 cents a year ago.
The company said it expects growth to resume in the second half of 2014 when the company will benefit from increased sales of fourth generation (4G) handsets in China, which yield higher royalty payments.
Clients such as Samsung are also expected to produce higher royalties for Ceva as they launch new products later in the year, Ceva said.
Analysts were expecting the company to earn 13 cents on revenue of $12.1 million in the second quarter.
Chief Executive Gideon Wertheizer said the company's results in the first quarter were boosted by record licensing revenue and included two agreements with key players in network infrastructure and smartphone chipsets.
Licensing revenue jumped 57 percent to $7.9 million while royalty revenue declined 19 percent. The drop reflects inventory adjustment of handsets in preparation for new product releases, Chief Financial Officer Yaniv Arieli said.
"Looking ahead, we believe we are well positioned to benefit from the continuing industry transition towards mass market adoption of smartphones at all price points," he said.
Ceva's Nasdaq-listed shares were down 3.3 percent at $15.70 in early trading. (Reporting by Tova Cohen; Editing by Steven Scheer)
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