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Smith Micro Records Increase in Third Quarter Revenues Over Prior Quarter and Positive Cash Flow

Oct 24, 2002
Company Records a Net Income of $.04 per Share After Tax Benefit

Aliso Viejo, CA -- Smith Micro Software, Inc. (NASDAQ: SMSI), a developer and marketer of a wide range of software and service solutions for the wireless and Internet markets, today reported its third quarter, 2002 results.

The company reported net revenues for the quarter ended September 2002, of $1.8 million, compared to $1.6 million reported in the second quarter of 2002, an increase of 14%. The company reported net income of $675,000 after tax benefit in the third quarter of 2002 resulting in a net income of $.04 per basic and diluted share after tax benefit, compared to a net loss of $495,000 in the second quarter of 2002 or a loss of $.03 per basic and diluted share, a net income increase of 236%.

"Our effort in the wireless sector continues to show improvement and strengthen as we solidify our customer relationships and continue to add new customers," said William W. Smith, Jr., President and Chief Executive Officer. "We also believe we have achieved a positive cash flow position in the third quarter because of our good business relationships with our wireless OEM customers, management of our accounts payables and receivables and a concerted effort to monitor costs. We feel confident of our ability to continue to be cash positive going forward," Mr. Smith continues.

In a separate announcement today Smith Micro said that its Board of Directors has authorized a program to repurchase up to 1,000,000 of the Company's outstanding common stock. The stock repurchase program will be put into effect immediately. Share repurchases by the Company may be made from time to time in the open market and in private transactions over the next eighteen months.

 

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 over the Internet via the company's website www.smithmicro.com or PRNewswire/Thonpson.

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 Wireless, and Broadband technologies, the Internet and the company's products and services enable wireless communications, eCommerce, eBusiness, Internet communications (voice-over-IP), video conferencing, and network fax, along with traditional computer telephony. Smith Micro's complete line of products is available through original equipment manufacturers (OEMs), direct sales, retail stores, value-added resellers (VARs). 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 risks and uncertainties relating to the company's financial prospects and projections, the company's plans for returning to sustained profitability and the company's ability to increase its business in the Wireless and Broadband segments. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are new and changing technologies, customer acceptance of those technologies, fluctuations or cancellations in orders from distribution customers, new and continuing adverse economic conditions, and the company's ability to compete effectively with other software companies. These and other factors could cause actual results to differ materially from those presented in any forward-looking statement and 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 OPERATIONS (see note below)
(in thousands, except per share amounts)

 

  Three Months Ended
September 30
(unaudited)
  2002 2001
Net Revenues:
   Products 1,637 1,754
   Services 209 554

Total Net Revenues 1,846 2,308
 
Cost of Revenues:
   Products 507 268
   Services 110 543

Total Cost of Revenues 617 811

Gross Margin 1,229 1,497
 
Operating Expenses:
   Sales & Marketing 516 876
   Research & Development 503 636
   General & Administrative 602 752
   Restructuring Costs   35

Total Operating Expenses 1,621 2,299

Operating Loss (392) (802)
Other (Expense) Income, net (3) 11

Loss Before Income Tax (395) (791)
Income Tax (Benefit) Expense (1,070) 3

Net Income (Loss) $675 $(794)

Net Income (Loss) per share, basic and diluted $0.04 $(0.05)

Weighted average shares outstanding,
basic and diluted
16,235 16,232

 

Notes: The adoption of Statement of Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, requires that Smith Micro no longer amortize goodwill. For comparison purposes, goodwill amortization expense was $136,000 in the third quarter of 2001.

Certain reclassifications have been made to prior year's balances to conform to the current period's presentation, which includes the adoption of Emerging Issues Task Force (EITF) 01-09, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products). The result of this adoption was a decrease in revenue with a corresponding decrease in selling and marketing expense of $214,000 for the three months ended September 30, 2001. There are no significant sales incentives in the current quarter.

 

Smith Micro Software, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (see note below)
(in thousands, except per share amounts)

 

  Nine Months Ended
September 30
(unaudited)
  2002 2001
Net Revenues:
   Products 4,447 4,284
   Services 909 2,038

Total Net Revenues 5,356 6,322
 
Cost of Revenues:
   Products 1,111 1,160
   Services 660 1,630

Total Cost of Revenues 1,771 2,790

Gross Margin 3,585 3,532
 
Operating Expenses:
   Sales & Marketing 1,748 3,828
   Research & Development 1,563 2,475
   General & Administrative 1,713 3,074
   Restructuring Costs   380

Total Operating Expenses 5,024 9,757

Operating Loss (1,439) (6,225)
Other (Expense) Income, net (25) 76

Loss Before Income Tax (1,464) (6,149)
Income Tax (Benefit) Expense (1,062) 92

Net Loss $(402) $(6,241)

Net Loss per share, basic and diluted $(0.02) $(0.38)

Weighted average shares outstanding,
basic and diluted
16,234 16,232

 

Note: The adoption of Statement of Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, requires that Smith Micro no longer amortize goodwill. For comparison purposes, goodwill amortization expense was $408,000 in the nine months ended September 30, 2001.

Certain reclassifications have been made to prior year's balances to conform to the current period's presentation, which includes the adoption of Emerging Issues Task Force (EITF) 01-09, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor's Products). The result of this adoption was a decrease in revenue with a corresponding decrease in selling and marketing expense of $526,000 for the nine months ended September 30, 2001. The impact for the current year is lower revenue and lower selling and marketing expense of $227,000.

 

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

 

  September 30,
2002
(unaudited)
December 31,
2001
ASSETS
Current Assets:
Cash & Cash Equivalents $3,853 $3,226
Accounts Receivable, Net 937 2,724
Inventory, Net 41 295
Prepaids & Other Assets 124 265

   Total Current Assets 4,955 6,510
Equipment and Improvements, net 284 482
Other Assets 46 42
Intangible Assets, Net 298 508
Goodwill 1,715 1,715

TOTAL ASSETS $7,298 $9,257

 
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $579 $1,160
Accrued Liabilities 816 1,795

   Total Current Liabilities 1,395 2,955
 
Common Stock 16 16
Additional Paid In Capital 24,792 24,789
Accumulated Deficit (18,905) (18,503)

   Total Stockholders' Equity 5,903 6,302

TOTAL LIABILITIES AND EQUITY $7,298 $9,257

 

 

 

 

 

 

 

 

 

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