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Smith Micro 1st Quarter Revenues Up 6% Over Year Ago

Apr 24, 2001
Company Implementing Cost-Cutting Measures That Should Help With the Company's Goal to Return Profitability Later in 2001

Aliso Viejo, CA -- Smith Micro Software, Inc. (NASDAQ: SMSI), a developer and marketer of wireless communication and utility software products, today reported net revenues for the quarter ended March 31, 2001, of $3.25 million, an increase of 6 % over $3.07 million in the same quarter last year. The company had a net loss of $1.6 million, or $0.10 per diluted share, compared with a net loss of $659,000 or $0.04 per diluted share in the same quarter last year. In the fourth quarter of 2000, the company reported a net loss of $991,000, or $0.07 per diluted share, on revenues totaling $4.1 million.

"Growing quarterly revenues on a year-over-year basis was not an easy accomplishment given the overall economic environment in the first quarter of 2001. Unsurprisingly, the holding pattern customers have placed on projects for our Internet Solutions Division's professional services business overshadowed the fact that our other businesses performed reasonably well at a time of industry-wide uncertainty," said William W. Smith, Jr., Chairman and Chief Executive Officer.

"Our wireless and broadband products had a good quarter, especially considering the cutbacks in the telecom sector. Since the beginning of 2001, we have announced agreements to develop or provide products to Audiovox and Verizon, and we are working on closing other similar deals. Revenue from our retail products in the quarter rose 50% to $817,000 from the same quarter last year, exceeding our quarterly expectations. This was primarily due to continued strength of our HotFax Message Center application and our CheckIt product line. The Macintosh portion of our business declined over the same period last year as a result of the slowdown in computer sales...a slowdown that Apple currently is projecting will be reversed by the fourth quarter of this year," Smith added.

Regarding the company's Internet Solutions business, Smith said, "The reduction in revenues from the fourth quarter of 2000 does not reflect any lost dotcom business, which was never our focus. In general, our Internet Solutions Division works with large brick & mortar companies and most of them are telling us that they believe the work is there and it will be completed, but much of it is on hold until the economic skies clear. In fact, we continue to close deals in this area, but these have been smaller, shorter-term projects than those a year ago."

Outlook

Smith indicated that the company has taken a number of cost-cutting measures, including a 20% plus headcount reduction. "We have been very selective in taking these steps so that we retain the resources necessary to reach our goal of profitability. Our operating plan currently calls for a loss in the current quarter-although we project it to be smaller than the first quarter loss as we have made these efforts to cut costs out of the second quarter operating budget. We then are targeting profitability later in the year barring any further deterioration in the general economic, business and consumer spending environments," Smith said.

Investor Conference Call

Smith Micro will hold an investor conference call to discuss the company's results at 4:30 p.m. eastern time later today. Investors may access the conference call via telephone, or over the Internet via the company's website www.smithmicro.com or www.vcall.com. To listen to the live call by telephone, please dial 888/209-3789 or go to either web site at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available through May 8 by dialing 800-633-8284 and entering reservation number 18609612.

About Smith Micro Software

Smith Micro Software, Inc., headquartered in Aliso Viejo, CA, is a developer and marketer of wireless communication and utility software products. The company designs integrated, cross platform, easy-to-use software for personal computing and business solutions around the world. With a focus on the Internet, Wireless, and Broadband technologies, the company's products and services enable eCommerce, eBusiness, Internet communications (voice-over-IP), video conferencing, wireless communications, and network fax, along with traditional computer telephony. Smith Micro's complete line of products is available through direct sales, retail stores, value-added resellers (VARs) and original equipment manufacturers (OEMs). Smith Micro's common stock trades on The Nasdaq Stock Market® under the symbol SMSI. For more information, contact Smith Micro at (949) 362-5800

This release may contain forward-looking statements that involve risks and uncertainties, including without limitation, the company's projected return to profitability in the third or fourth quarters as well as an increase in business for our Internet Solutions Division. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are new and changing technologies and customer acceptance of those technologies fluctuations or cancellations in orders from distribution customers, and the company's ability to compete effectively with other software companies. These and other factors that could cause actual results to differ materially are discussed 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.

Financial Schedules follow

Smith Micro Software, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

 Three Months Ended
March 31
(unaudited)
 20012000
Net Revenues
   Software2,6292,736
   Consulting616338

Total Net Revenues3,2453,074
Cost of Revenues
   Software517556
   Consulting52157

Total Cost of Revenues1,038613

Gross Margin2,2072,461

 
   Sales & Marketing1,7191,379
   Research & Development1,007937
   General & Administrative1,058877

Total Operating Expenses3,7843,193

Operating Loss(1,577)(732)

Other Income, net32112
Loss Before Income Tax(1,545)(620)
Income Tax Expense6939
Net Loss$(1,614)$(659)

Net loss per basic and diluted share Per Share$(0.10)$(0.04)

Weighted average shares outstanding, basic and diluted16,23215,759

Smith Micro Software, Inc.
Consolidated Balance Sheets
(in thousands)

 (unaudited)
March 31,
2001
December 31,
2000

ASSETS
Current Assets:
Cash & Cash Equivalents$5,709$6,178
Accounts Receivable (Net)3,7554,750
Inventory355338
Prepaids & Other Assets251294

   Total Current Assets10,07011,560
Equipment and Improvements, net696737
Other Assets5289
Intangible Assets2,7042,928

TOTAL ASSETS$13,522$15,314

 
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable$1,062$1,590
Accrued Liabilities1,6471,297

   Total Current Liabilities2,7092,887
Common Stock1616
Additional Paid In Capital24,78924,789
Accumulated Deficit(13,992)(12,378)

   Total Stockholders' Equity10,81312,378

TOTAL LIABILITIES AND EQUITY$13,522$15,314

Smith Micro Software, Inc.
Business Division Revenue
(in thousands, unaudited)

 March 31, 2001
(UNAUDITED)
 Software Products

 
 Wireless & Broadband

 Macintosh 

 Retail 

Total Software Products

Internet Solutions

Total Company

Net Revenue$1,394$278$817$2,489$756$3,245
Cost of Revenue   4905481,038
 
Gross Profit   $1,999$208$2,207
 
 March 31, 2000
(UNAUDITED)
 Software Products

 
 Wireless & Broadband

 Macintosh 

 Retail 

Total Software Products

Internet Solutions

Total Company

Net Revenue$1,531$378$543$2,452$622$3,074
Cost of Revenue   498115613
 
Gross Profit   $1,954$507$2,461
 
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