By Request: SMSI Notes From Today’s LIVE YouTube Broadcast

Today at 12:30PM ET, I hosted a LIVE Stock Market Update, along with an SMSI Earnings Preview, followed by Q&A. You can see it here:

https://www.youtube.com/channel/UCM7suHbR_DCbstUXNIS2Kqg

By request, here are the notes I shared on my screen during the broadcast:
Roth initiated coverage with a BUY rating this month. His estimate for Q3 is $6.1 million and -$0.01 EPS. His target price is $4, up 50%+ from current levels.
My research indicates that Q3 revenue will easily beat those expectations… and that EPS will be positive, not negative. I’ll be interested in what that does for his price target in his post-earnings write-up.
In the meantime, I did some research on the analyst and he covered SMSI eight years ago. His initiation read as follows:

Feb 2, 2010

Smith Micro Software, Inc. (NASDAQ:SMSI $7.75; Buy) Smith Micro is a leading supplier of software solutions that manage adaptive mobile connectivity and personal digital content for enterprise, consumer and operator customers. Its flagship, Quicklink Mobile, manages and optimizes connectivity of mobile devices such as notebooks, netbooks and other emerging form factors onto wireless networks. Consequently, the company is extremely well positioned for the huge ramp of mobile devices that is projected to drive 40% CAGR in the wireless PC modem market. Smith Micro services seven of the top 10 north American carriers and two of the top three PC OEMs. With limited competition (Smith Micro acquired its closest competitor), attractive financials and a reasonable valuation (less than 10 times 2011 EPS), Smith Micro is an attractive play on the growth in mobile devices. We see upside to the $13-16 level and initiate coverage with a Buy rating.

You have to adjust for a 1:4 reverse split, but once you do, you can see that SMSI went from $31 to $68 in less than a year on his watch (after having already gone from $14.56 to $31 before he initiated coverage).

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I received an invite to download an Internet of Things report. The invite read…

Security & Connectivity in the Future of the Internet of Things

The Internet of Things is here. Are you ready (and secure)? Ten years from now, it will be hard for us to remember a world where everything wasn’t connected to the internet in a way or another. Even today, we don’t really care to know which technology will be used; things will be simply either connected or will be a problem (and your kids, customers or business partners will chase you until you get everything connected back)

Download Security & Connectivity in the Future of the Internet of Things to learn more.

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Finally, I wrote that most people don’t realize that Sprint’s strategy will spur other carriers to partner with software vendors like SMSI.

Sprint is aggressively pricing its phone service to attract new customers (even at a loss) because they know they have unique add-on services like Safe & Found and others. Phone service is not unique, but add-on services can be.

With those services, Sprint will lock customers in for the long-term. For those who don’t already know, U.S. carriers are constantly losing and gaining about 25% of their customers EVERY YEAR. But if you can stop losing customers (via a strategy like Sprint’s) while continuing to gain new ones, your market share starts to take off… and if you look at Sprint’s most recent quarter, that’s exactly what’s starting to happen.

This is great news for SMSI, because Sprint sees that the strategy is working. More importantly, if the competition is sure to see it too, which will force them to start pushing add-on services also, which increases the odds of new carrier wins for SMSI. So, no matter what happens, the success of Sprint’s strategy bodes well for SMSI’s potential going forward.

You can read a recent analysis of Sprint’s pricing strategy here…

https://seekingalpha.com/article/4212177-sprints-new-iphone-strategy-win-apple-sprint?

I’m looking forward to Wednesday’s earnings report. Have a great weekend. Cheers!

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Disclosures / Disclaimers: I am long SMSI, but this is not a solicitation to buy, sell, or otherwise transact any stock or its derivatives. Nor should it be construed as an endorsement of any particular investment or opinion of the stock’s current or future price. To be clear, I do not encourage or recommend for anyone to follow my lead on this or any other stocks, since I may enter, exit, or reverse a position at any time without notice, regardless of the facts or perceived implications of this article.

I am not a financial advisor. Nor am I providing any recommendations, price targets, or opinions about valuation regarding the companies discussed herein. Any disclosures regarding my holdings are true as of the time this article is written, but subject change without notice. I frequently trade my positions, often on an intraday basis. Thus, it is possible that I might be buying and/or selling the securities mentioned herein and/or its derivative at any time, regardless of (and possibly contrary to) the content of this article.

I undertake no responsibility to update my disclosures and they may therefore be inaccurate thereafter.  Likewise, any opinions are as of the date of publication, and are subject to change without notice and may not be updated. I believe that the sources of information I use are accurate but there can be no assurance that they are. All investments carry the risk of loss and the securities mentioned herein may entail a high level of risk. Investors considering an investment should perform their own research and consult with a qualified investment professional.

I wrote this article myself, and it expresses my own opinions. I am receiving no compensation for it, nor do I have a business relationship with any company whose stock is mentioned in this article. The information in this article is for informational purposes only and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

The primary purpose of this blog/forum is to attract new contacts with professional industry expertise to share research and receive feedback (confirmation / refutation) regarding my investment theses.

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9 thoughts on “By Request: SMSI Notes From Today’s LIVE YouTube Broadcast

  1. Thank you Mark for the recap, whime i was there during the love broadcast, sometimes.i miss some little details so this helps and i love reading it over and over how we have such a winner here, only matter of time

    I totally agree how Sprint model right now could serve as a catalyst for SMSI. I have actually wondered why Sprint hasnt put out any tv advertisement yet on safe and found, and for that matter trackers, but i suppose they might wait until 5G approaches, but it would be a great jolt to the industry right now if they first adopt IoT in a wide scale (security and digital lifestyle)

    And yes funny you mentioned Black mirror, one of my favorite series on Netflix. Very provocative, and thought provoking show i have watched. Technology certainly has place in society but at extreme spectrum is scary

    Liked by 1 person

  2. One popular selling point for Safepath IOT in the future, which you’ve mentioned Mark, is pet tracking. However, from what I can see this will have to be used with some external dog tag. In an ideal world, owners would be able to track the (normally) already implanted microchips that come with all rescue dogs (and cats). Anyway, I could see this being useful for pet owners, complementing parents tracking their kids and spouses, but somebody, presumably Sprint would have to sell a dog tag or something to make this work. Keep up the good research on SMSI.. so far, so good!

    Like

  3. Hey Mark,

    From watching your videos I believe you said that the numbers in your model may not be hit (if they are it would be amazing), but are you still expecting this to be the case. Do you think your model is slightly off somewhere (if so why not adjust it?)

    Thanks,
    Saif

    Like

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