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Smith Micro Reports Third Quarter Results

Oct 25, 2001
Revenues Up 127% and Loss down 79% from Prior Quarter

Aliso Viejo, CA -- Smith Micro Software, Inc. (NASDAQ:SMSI), a developer and marketer of wireless communication andutility software products and professional services today reportednet revenues for the quarter ended September 30, 2001, of $2.5million compared to $3.4 million in the same quarter last year and$1.1 million in the second quarter of 2001. The company had a netloss of $794,000 or $0.05 per diluted share compared with a netloss of $873,000 or $0.05 per diluted share in the same quarterlast year and $3.8 million or $0.24 per diluted share in the secondquarter of 2001.

"We are pleased with the significant revenue recovery from thesecond quarter of 2001 and especially in the major reduction of ourloss in the third quarter compared to the second quarter of 2001,"said William W. Smith, Jr., President and Chief Executive Officer."The Retail business showed a very strong recovery and our Wirelessorders flowed at an increased and steady pace," Smith added.

"We continue to be positive about the efforts in the wirelesssector. During the third quarter we announced QuickLink® Mobilebundling agreements with Hughes Network Systems and Telus Mobility.We also just announced that QuickLink® Mobile now supports PalmOS® and Microsoft® Windows® CE -based Pocket PCs whichwe expect to significantly increase our wireless marketopportunities," Smith concluded.

Outlook

Mr. Smith indicated that the company's core business remainsstrong as indicated by its positive Retail performance along withthe growing acceptance of our wireless products. "With thisoptimistic business outlook combined with the full quarter effectof prior cost reductions we anticipate break even to nominal profitin the fourth quarter," Smith said.

Investor Conference Call

Smith Micro will hold an investor conference call to discuss thecompany's results at 4:30 p.m. eastern time later today. Investorsmay access the conference call over the Internet via the company'swebsite www.smithmicro.comor www.vcall.com.

About Smith Micro Software

Smith Micro Software, Inc., headquartered in Aliso Viejo, CA, isa developer and marketer of wireless communication and utilitysoftware products. The company designs integrated, cross platform,easy-to-use software for personal computing and business solutionsaround the world. With a focus on the Internet, Wireless, andBroadband technologies, the company's products and services enableeCommerce, eBusiness, Internet communications (voice-over-IP),video conferencing, wireless communications, and network fax, alongwith traditional computer telephony. Smith Micro's complete line ofproducts 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 StockMarket® under the symbol SMSI. For more information, contact Smith Micro at (949)362-5800.

This release may contain forward-looking statements thatinvolve risks and uncertainties, including without limitation risksand uncertainties relating to the company's financial prospects andprojections, the company's plans for returning to profitability andthe company's ability to increase in business in its Wireless andBroadband segment. Among the important factors that could causeactual results to differ materially from those in theforward-looking statements are new and changing technologies,customer acceptance of those technologies, fluctuations orcancellations in orders from distribution customers, new andcontinuing adverse economic conditions, and the company's abilityto compete effectively with other software companies. These andother factors that could cause actual results to differ materiallyare discussed in the company's filings with the Securities andExchange Commission including its recent filings on Forms 10-K and10-Q.

Smith Micro, the Smith Micro logo and QuickLink aretrademarks or registered trademarks of Smith Micro Software, Inc.Palm OS and HotSync are registered trademarks, and Palm is atrademark, of Palm, Inc. All other trademarks and product names arethe property of their respective companies.

Financial Schedules follow

Smith Micro Software, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 Three Months Ended
September 30
(unaudited)
 20012000
Net Revenues
   Software1,9682,632
   Consulting554742

Total Net Revenues2,5223,374
Cost of Revenues
   Software268591
   Consulting543394

Total Cost of Revenues811985

Gross Margin1,7112,389

 
   Sales & Marketing1,0901,394
   Research & Development636969
   Restructuring35-----
   General & Administrative752986

Total Operating Expenses2,5133,349

Operating Loss(802)(960)

Other Income, net1194
Loss Before Income Tax(791)(866)
Income Tax Expense37
Net Loss$(794)$(873)

Net loss per basic and diluted share Per Share$(0.05)$(0.05)

Weighted average shares outstanding, basic anddiluted16,23216,030
Smith Micro Software, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 Nine Months Ended
September 30
(unaudited)
 20012000
Net Revenues
   Software4,8108,008
   Consulting2,0381,662

Total Net Revenues6,8489,670
Cost of Revenues
   Software1,1601,634
   Consulting1,630521

Total Cost of Revenues2,7902,155

Gross Margin4,0587,515

 
   Sales & Marketing4,3544,235
   Research & Development2,4752,910
   Restructuring380-----
   General & Administrative3,0742,803

Total Operating Expenses10,2839,948

Operating Loss(6,225)(2,433)

Other Income, net76321
Loss Before Income Tax(6,149)(2,112)
Income Tax Expense9252
Net Loss$(6,241)$(2,164)

Net loss per basic and diluted share Per Share$(0.38)$(0.14)

Weighted average shares outstanding, basic anddiluted16,23215,898
Smith Micro Software, Inc.
Consolidated Balance Sheets
(in thousands)
 (unaudited)
September 30,
2001
December 31,
2000

ASSETS
Current Assets:
Cash & Cash Equivalents$3,747$6,178
Accounts Receivable (Net)1,5454,750
Inventory390338
Prepaids & Other Assets253294

   Total Current Assets5,93511,560
Equipment and Improvements, net572737
Other Assets3289
Intangible Assets2,2842,928

TOTAL ASSETS$8,823$15,314

 
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable$948$1,590
Accrued Liabilities1,6891,297

   Total Current Liabilities2,6372,887
Common Stock1616
Additional Paid In Capital24,78924,789
Accumulated Deficit(18,619)(12,378)

   Total Stockholders' Equity6,18612,427

TOTAL LIABILITIES AND EQUITY$8,823$15,314

Smith Micro Software, Inc.
Business Division Revenue
(in thousands, unaudited)
 Quarter Ended September 30, 2001
(UNAUDITED)
 Software Products

 
 Wireless & Broadband

 Macintosh 

 Retail 

Total Software Products

Internet Solutions

Total Company

Net Revenue$678$284$961$1,923$599$2,522
Cost of Revenue   259552811
 
Gross Profit   $1,664$47$1,711
 
 Nine Months Ended September 30,2001
(UNAUDITED)
 Software Products

 
 Wireless & Broadband

 Macintosh 

 Retail 

Total Software Products

Internet Solutions

Total Company

Net Revenue$2,600$804$1,175$4,579$2,269$6,848
Cost of Revenue   1,1161,6742,790
 
Gross Profit   $3,463$595$4,058
 
 Quarter Ended September 30, 2000
(UNAUDITED)
 Software Products

 
 Wireless & Broadband

 Macintosh 

 Retail 

Total Software Products

Internet Solutions

Total Company

Net Revenue$758$392$1,301$2,451$923$3,374
Cost of Revenue   472513985
 
Gross Profit   $1,979$410$2,389
 
 Nine Months Ended September 30,2000
(UNAUDITED)
 Software Products

 
 Wireless & Broadband

 Macintosh 

 Retail 

Total Software Products

Internet Solutions

Total Company

Net Revenue$3,685$1,036$2,500$7,221$2,449$9,670
Cost of Revenue   1,3997562,155
 
Gross Profit   $5,822$1,693$7,515
 
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