Smith Micro Bags Sprint

Smith Micro (SMSI) has bagged another big wireless telco customer.

The Aliso Viejo, Calif., maker of devices that transfer media like music between computers and mobile phones is in the final stages of signing a supply agreement with Sprint Nextel (S), say people familiar with the deal.

Representatives from Smith Micro and Sprint declined to comment.

Though shares sold off Friday, Smith Micro's stock has surged in the past month. Driving the rally have been stronger-than-expected fourth-quarter numbers and the growing assumption that the company's music kits will gain popularity as phone companies try to answer the looming threat of the Apple (AAPL) iPhone, which AT&T's (T) Cingular is planning to sell.

The company's Music Essentials product has been popular in recent months with Verizon Wireless, a joint venture between Verizon (VZ) and Vodafone (VOD). In fact, last quarter's blowout numbers had a lot to do with Verizon. Sales to the No. 2 wireless giant accounted for $12.7 million, or 74% of total revenue in the fourth quarter for Smith Micro, executives said on an earnings conference call last month.

Smith Micro's music kit is seen by some industry observers as one of the leading alternatives to Apple's iTunes application. Like iTunes, Smith Micro's kit attempts to be a seamless music management program that allows users to download things like songs and ringtones wirelessly from phone company as well as move playlists back and forth between phones and computers.