suffered a big setback Thursday as a customer delayed its release of a key product.
Shares of the software company sank 2% after
pushed back the release of a product tied to
Verizon Wireless, a joint venture of Verizon and
, is the largest customer for Smith Micro's music manager kit. The software program and data cord allow mobile phone users to load songs on their handsets.
Verizon had previously set last month as the release date for its Vista-compatible Music Essential Manager kit from Smith Micro. But according to its Web site, the rollout is now scheduled for June.
But even that commitment seems weak, as indicated in a footnote on the site that says: "These dates are estimates. Verizon Wireless does not guarantee that the versions of Music Essentials Manager for any of these devices will support Windows Vista by any specific date."
The delay is no small matter for Smith Micro. ThinkEquity analyst Anton Wahlman estimates the Vista problem will cut about $3.4 million, or 21%, off Smith Micro's projected second-quarter sales.
The Verizon Vista worries have helped drag down Smith Micro's shares 32% since April, when some investors grew concerned over the potential impact of the delay. On a May 2 conference call with analysts, CEO Bill Smith said the company was at the mercy of its telco customers who had yet to provide cell phone software.
"We are in a bit of a holding pattern, waiting for the delivery of key hardware device drivers," Smith said on the call.
Some industry observers say the hotly anticipated
iPhone may have played a hand in the Verizon Vista delay.
"We believe this delay may also have been caused in part by Apple's iPhone launch, which was recently announced as June 29, at the very end of the month," ThinkEquity's Wahlman writes. "That gave Verizon Wireless almost a month's worth of extra breathing room, compared to its initial plan."
With top rival
getting a five-year exclusive deal to sell the iPhone, Verizon Wireless has been working on at least one
iPhone killer device, as
reported last month.
Music looks to be a huge ingredient in the success of new phones this year, and it wouldn't be surprising to see Verizon Wireless making an extra effort to get the bugs out of any new devices.
But despite the nail-biting delay for Smith Micro, Wahlman says he's not cutting his full year sales estimate for the company. Every dollar not spent on the Vista kit in the second quarter will be a dollar booked in the next quarter, he says.
"We believe this will all come back in third quarter," writes Wahlman. "And that the annual revenue number will remain substantially intact."