Socket Mobile, Inc. ( SCKT)

Q3 2010 Earnings Conference Call

October 27, 2010 5 PM ET

Executives

Jim Byers

Kevin Mills

Dave Dunlap

Analysts

Paul Bernstein [ph] – Black Diamond

Sue Fidel [ph] – Private Investor

Steve Swanson [ph] – Private Investor

Presentation

Operator

Greetings and welcome to the Socket Mobile Third Quarter 2010 Management Conference Call. (Operator instructions)

It is now my pleasure to introduce your host, Jim Byers, MKR Group. Thank you, Mr. Byers, you may begin.


Jim Byers

Thank you, operator. Good afternoon and welcome to Socket’s conference call to review financial results for its 2010 third quarter and nine months ended September 30 th, 2010. Online today are Kevin Mills, President and CEO of Socket; and Dave Dunlap, CFO of Socket.

Socket Mobile distributed its earnings release over the wire service at the close of the market today. The release has also been posted on Socket’s website at www.socketmobile.com. In addition, a replay of today’s call will be available at vcall.com shortly after the call’s completion, and a transcript of this call will be posted on the Socket website within a few days.

We have also posted replay numbers in today’s press release for those wishing to replay this call by phone. The phone replays will be available for one week.

Before we begin, I would like to remind everyone that this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. Such forward-looking statements include, but are not limited to, statements regarding mobile computer, data collection and OEM products, including details on timing, distribution and market acceptance of products, and statements predicting trends, sales and market conditions and opportunities in the markets in which we sell our products.

Such statements involve risks and uncertainties and actual results could differ materially from the results anticipated in such forward-looking statements as a result of a number of factors, including, but not limited to, the risk that our new products may be delayed or not rolled out as predicted, if ever, due to technological, market, or financial factors, including the availability of necessary working capital; the risk that market acceptance and sales opportunities may not happen as anticipated; the risk that our application partners and current distribution channels may choose not to distribute the products or may not be successful in doing so; the risk that acceptance of our products in vertical application markets may not happen as anticipated; and other risks described in our most recent Form 10-K and 10-Q reports filed with the Securities and Exchange Commission. Socket does not undertake any obligation to update any forward-looking statements.

With that said, I would now like to turn the call over to Socket’s CEO, Kevin Mills.

Kevin Mills

Thanks, Jim, and thank you for joining us today. Our third quarter revenue of $3.4 million reflects record quarterly sales of our SoMo handheld computer along with improve sales of our cordless scanning products, offset by reduced sales in our legacy businesses.

I’ll first provide an update on the market dynamics for our SoMo handheld and scanning products and how we see these two core elements of our business translating to growth going forward. I’ll then discuss the outlook for our current markets and the business for the rest of 2010, starting with our SoMo and SoMo-driven barcode scanning solutions.

In Q3, we generated quarterly SoMo sales of $1.67 million, slightly lower from the record $1.73 million we achieved in Q2. In Q3, we saw lower shipments to our customer app account as they transitioned during the quarter from our standard SoMo to a proprietary and customed Epoch branded SoMo. This process has completed and going forward, we will be delivering customized SoMo units to Epocal on a scheduled basis.

The rest of our SoMo business maintained a steady pace in Q3 driven by software applications developed by our developer partners over the past two years that are now deployed.

As we look to Q4, we are expecting record SoMo shipments in the quarter. With app calls transition to provide [inaudible] branded version of the SoMo accomplice. They are seeing a solid uptick of their business around the world.


As mentioned on our last call, Epocal launched their solution in Japan, Germany, Italy and the U.K. at the beginning of the summer. And the initial markets acceptance seems to be high and is driving good demand for their bedside blood analysis solution, which in turn drive sales for both our SoMo and plug-in scanners.

In addition to this very positive Epocal use and a steady demand from existing SoMo customers in Q3, we began initial deployments with SigmaCare software for long-term healthcare. [Inaudible] hospitals select us the combination solutions of SigmaCare software running on the SoMo as their solution and has begun a rollout to multiple locations.

We’ve discovered getting the first deployment is almost the most difficult and we are very pleased to be working with SigmaCare, which provides software solutions to over 150 long-term facilities in the U.S. We believe a successful deployment at Lancaster will serve as a validation to promote deployments with similar enterprises.

In addition to Lancaster and SigmaCare, we’ve been selected by our long-term care provider in Australia that supports more than 100 facilities. We will provide details about this win in early November.

Our SoMo handheld is gaining increasing acceptance and seems to be the ideal product within the long-term healthcare market and we’re focus on maximizing opportunities in this area. Hospitality is the secondary as we continue to see strong demand for the SoMo handheld, particularly with tableside ordering.

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