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SMITH MICRO SOFTWARE, INC. REPORTS 1997 FINANCIAL RESULTS

Feb 10, 1998
 

ALISO VIEJO, CA -Smith Micro Software, Inc. (Nasdaq NMS: SMSI) today announced financial results for its fourth quarter and fiscal year ended December 31, 1997.

Net revenues for the fourth quarter ended December 31, 1997, were $3,256,000, as compared to $4,944,000 reported for the fourth quarter in 1996. Net income for the fourth quarter was $44,000, or less than one cent per share, compared with $541,000, or $.04 per share, for the comparable 1996 period.

For the year ended December 31, 1997, net revenues were $11,684,000 as compared to $22,091,000 in 1996. The company reported a net loss of ($1,587,000), or ($.11) per share, in 1997 compared with a net loss of ($1,519,000), or ($0.11) per share, in 1996. On a pro forma basis, the company reported net income of 3,650,000, or $.26 per share, in 1996 prior to the write-off of acquired in- process research and development expenses related to the acquisition of Performance Computing Incorporated.

According to Mr. Nelson, the Chief Financial Officer, the company experienced continued weakness in the OEM business during 1997 which the Company believes was related to the delay in an industry wide adoption of a 56k modem standard. Additionally, the product mix of OEM revenue included a higher percentage of royalty revenue and a lower percentage of turnkey product revenue during 1997 when compared with 1996.

On February 6, 1998, the International Telecommunications Union (ITU), formally adopted a new standard for 56-kbps computer modems. VisionQuest 2000, a market researcher, expects that the ITU agreement will significantly boost modem sales during 1998 and Dataquest analyst Lisa Pilgrim expects 56K modems to increase modem sales in North America by 27% during 1998 over the 1997 volume.

This release may contain forward-looking statements that involve risks and uncertainties. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are economic, competitive, governmental and technological factors effecting the company's operations, markets, products, services and prices, as well as, other factors detailed in the company's filings with the Securities and Exchange Commission including its recent filings on Forms 10-K and 10-Q.

Smith Micro and the Smith Micro logo are trademarks or registered trademarks of Smith Micro Software, Inc. All other trademarks and product names are the property of their respective companies.

For more information on Smith Micro Software, Inc., via fax at no charge, please call

1-800-PRO-INFO and enter ticker symbol SMSI).

FINANCIAL TABLES FOLLOW
SMITH MICRO SOFTWARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share amounts)

 Three Months Ended
December 31
Twelve Months Ended
December 31
 1997
(unaudited)
1996
(unaudited)
1997
(unaudited)
1996
Net revenues$3,256$4,944$11,684$22,091
Cost of revenue9091,2543,8536,795
Gross profit2,3473,6907,83115,296
Operating expenses:
  Selling and marketing9211,0823,5252,939
  Research and development7309153,2663,324
  General and administrative0005,169
Total operating expenses8129674,1913,796
Operating loss2,4632,96410,98215,228
Interest income, net(116)726(3,151)68
Loss before income taxes78901(2,426)917
Income tax expense (benefit)34360(839)2,436
Net Loss$44$541$(1,587)$(1,519)
Net loss per basic and diluted share$0.0031$0.04$(0.11)$(0.11)
Weighted average shares outstanding, basic and diluted14,07514,07614,07513,992
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