Smith Micro Software Incorporated reported yesterday that its fourth quarter earnings beat market estimates. Morgan Joseph analyst Kevin Dede said, “The rise in shares was due to the earnings beat and covering of short positions by investors.” Smith Micro earned 25 cents a share, excluding items, for the fourth quarter, while analysts on average were expecting earnings of only 20 cents a share, excluding special items, according to Reuters Estimates. Looking forward, the company also said that it is expecting revenue of $95 million to $105 million for fiscal ‘08, analysts are expecting revenue of $102.7 million.
The earnings release was full of positive news for the fourth quarter and for 2008. The profit jump was mainly attributed to the fact that gross margins for the quarter increased to 77 percent from 68 percent. The company said its acquisition of e-frontier Inc’s assets has expanded its reach into the consumer and prosumer graphic marketplace and expects continued growth throughout 2008 in all these markets.
Last month the stock hit its lowest point in two years, because of uncertainty with their largest customer, Verizon Wireless, and its shifting away from prepackaged music download software. Smith Micro has proved that it was not a serious issue, and continues to maintain a strong relationship with VZW. They have also proudly signed three significant original equipment manufacturing deals and expect shipments to begin in the second half of 2008. In late afternoon trading, the stock is up $1.24 to $6.35 on three times the average trading volume.
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