Boston, MA 05/09/2014 (wallstreetpr) – Smith Micro Software, Inc. (NASDAQ:SMSI) emerged out to be the biggest loser of the day with more than 40% value loss in the early trade hours. The Bears took charge after the company posted wider than expected loss and announced plans of cutting of jobs.
Wider Than Normal Revenue Decline
The wireless and mobility solutions provider reported a revenue drop of as much as in the quarter to $8.4 million, which failed to meet the analysts’ expectation of $9.79 million. The company’s earnings per share too missed the analysts’ estimate of $0.09, which came at $0.07. Smith Micro Software, Inc. (NASDAQ:SMSI) suffered on account of declined revenue growth in Productivity and Graphics business due to seasonal factors, which drove the net loss to $5.2 million or $0.14 per share as against $6.2 million or $0.17 per share in the previous year’s quarter. The stock bore the brunt of the sell off after the company said that it will engage in cost reduction measures, which includes a headcount cutback of as much as 20%.
During the conference call, the company’s CEO, William Smith Jr. commented that while the drop in revenue due to seasonality factors in its Productivity and Graphics business in between fourth quarter to first quarter is a normal phenomenon, but the revenue decline this year was steep. He said that nearly 19% of the customers in the fourth quarter did not contribute to revenue in the first quarter.
Restructuring Cost
In addition to this, the company said that it did not reach any conclusion for potential deals and therefore, uncertainty surrounding the flow of future revenues forced it to adopt additional cost cutting steps. Resultantly, Smith Micro Software, Inc. (NASDAQ:SMSI) is taking immediate measures so as to slash down its costs by nearly $2 million per quarter. The same will result in a restructuring cost of $1.6-$2 million, which will be recorded in the books in the second quarter. Further, its CFO Schmidt is reported to leave on May 19 as part of reorganization plans.
