* Company cites weak orders from a key customer
* Analysts suggest customer could be Verizon
* Shares down as much as 40 pct
By Bijoy Koyitty
BANGALORE, Feb 9 Shares of Smith Micro Software
(SMSI.O) fell as much as 40 percent on Wednesday, a day after
it suspended its 2011 revenue outlook on worries of weak orders
from a key customer, which analysts said could be Verizon
Barely a month after announcing its 2011 revenue outlook,
the communication software maker said late Tuesday that it
expects first-quarter orders for its core connection manager
product, mainly from a "key" customer, to fall below expected
At least two analysts said the customer in question could
be Verizon, which accounts for 40 percent of Smith Micro's
"We believe the key customer is Verizon, which recently
launched 4G networks, although the launch was a few weeks later
than Smith Micro originally anticipated," Wedbush analyst Scott
Sutherland wrote in a note.
Smith Micro attributed the order shortfall to the customer
carrying sufficient inventory to support sales of mobile
broadband services for the first quarter.
"They (Smith Micro) did not specifically identify the
customer, but logic suggests it is Verizon," CL King &
Associates analyst Lawrence Harris said.
Given that Smith Micro's gross margins for connection
management software is generally greater than 90 percent, the
company may post a first-quarter operating loss, Harris added.
Smith Micro also forecast first-quarter 2011 revenue to be
$15-20 million, and said it expects the pace of sales for
mobile broadband devices using its software to return to "more
typical" levels in future quarters.
The company said it intends to provide quarterly revenue
outlook for the remainder of 2011.
"I would suspect that they would probably wait for several
quarters before deciding whether to reinstate annual guidance,"
Aliso Viejo, California-based Smith Micro Software makes
software products and services mainly for mobile computing and
Smith Micro's other important customers include Sprint
Nextel Corp (S.N), Dell Inc DELL.O and AT&T Inc (T.N).
Shares of the company, which fell as much as 40 percent to
$7.90 in early morning trade, pared some of their losses to
trade down 36 percent at $8.32 late Wednesday morning on
(Reporting by Bijoy Koyitty in Bangalore; Editing by Roshni