Smith Micro Software, Inc. ( SMSI) Q3 2011 Earnings Call November 2, 2011 4:30 PM ET Executives Charles Messman – President, MKR Group, Inc. William Smith – Chairman, President and CEO Andrew Schmidt – CFO, Secretary and VP Analysts Jason North – Jefferies & Company Scott Sutherland – Wedbush Securities Charlie Anderson – Dougherty & Company Presentation Operator
Previous Statements by SMSI
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Among the important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements are changes in demand for the company’s products from its customers and their end-users, new and changing technologies, customer acceptance of those technologies, new and continuing adverse economic conditions, and the company’s ability to compete effectively with other software companies. These and other factors discussed in the company’s filings with the Securities and Exchange Commission, including its filings on Form 10-K, 10-Q, and 8-K, could cause actual results to differ materially from those expressed or implied in any forward-looking statements.The forward-looking statements contained in this conference call are made on the basis of the views and assumptions of management regarding future events and business performance as of the date of this conference call, and the company does not undertake any obligation to update these statements to reflect events or circumstances occurring after the date of this release and conference call. Before I turn the call over to Bill Smith, Chairman, President, and CEO of Smith Micro, I want to point out that in our forthcoming prepared statements, we will refer to certain non-GAAP financial measures. Please refer back to our press release disseminated earlier today for reconciliation of the non-GAAP financial measures. With that said, I’ll now turn the call over to Bill. Bill. William Smith Thanks, Charles. Good afternoon, everyone, and welcome to our third quarter ending September 30, 2011 earnings conference call. Revenues for the quarter were $12.6 million with approximately $10.2 million coming from our wireless products and $2.4 million resulting from our productivity in graphics product line. Non-GAAP gross profit was $10.2 million for the quarter with gross margins up 81%. As indicated in our preliminary announcement on October 13, we’ve recorded a charge for impairment of goodwill and other live – other long-lived assets of $112.9 million and net deferred tax asset allowance of $11.4 million. Excluding these one-time non-cash charges, non-GAAP net loss for the third quarter was approximately $9.7 million.
Clearly, we are disappointed in these results. The growing trend to access the mobile Internet through smartphones and tablets has affected our connection management software business much quicker than we had anticipated. Consumers are rapidly transitioning to smartphones devices with an embedded hotspots or mobile hotspot pucks for accessing mobile broadband services. These form factors have begun to overtake USB and embedded wireless modems as a primary means of connecting to the wireless data networks.The accelerating rate of change in this technology transition has been the primary driver for the pressure on our revenues. We are delivering new products to capitalize on this transition and I will discuss the initial market response to these products later on this call. We are also keenly focused on dramatically lowering our cost structure and changing our operational approach to meet new market reality in order to get back to profitability as soon as possible. We have already made good progress with a number of cost reductions and we are accelerating our efforts to restructure our operations to a significantly leaner and lower cost organization. I will get into both our restructuring efforts and new product initiatives in greater detail after I turn the call over to Andy, who will take you through the details of the financial results. Andy? Andrew Schmidt Thank you, Bill. First, let me go over our customary introductory items. As we have in past quarters, we have provided non-GAAP results and a reconciliation of non-GAAP and GAAP results. The non-GAAP results discussed on this call net out amortization of intangibles associated with acquisitions, stock compensation-related expenses, and non-cash tax expense to provide comparable operating results. Read the rest of this transcript for free on seekingalpha.com