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Stock in Smith Micro Software Corp. Rises Sharply on Verizon Wireless Rumor

Posted on: Friday, 16 July 2004, 06:00 CDT

Jul. 16--Smith Micro Software Corp.'s stock price shot up 17 percent, or 27 cents, on Thursday, and company officials say they have an inkling why.

The Aliso Viejo company plans to announce today that Verizon Wireless selected Smith Micro to supply software for Verizon's new cell-phone service called EV-DO, which provides high-speed Internet connections.

EV-DO, part of a new cellular category known as 3G, or third generation, offers data- transfer speeds of 350 kilobits per second with bursts of 1.5 megabits per second. That's about three times faster than Verizon Wireless's fast-data service and many times faster than the sluggish 14 kbps service of just a few years ago.

Smith Micro's software lets cell-phone customers access fast data service on laptops through a wireless PC card or a cable. Older versions of the software, and that of Sierra Wireless, work on the phones but not at such fast speeds, said Bill Smith, Smith Micro's chief executive.

"The Verizon adoption rate for wireless data services will take a very large leap as (Verizon) rolls out the EV-DO network," he said.

"This should be a significant growth catalyst to our overall business."

He declined to offer further details.

The service is in only a few test markets, but Verizon says it should be available to 80 million users by year's end.

Sales of 3G phones worldwide are expected to grow 140 percent to 48 million units this year, according to market researcher IDC.

In comparison, total sales of cell phones are expected to grow 9 percent to 500 million units.

The 3G technology has taken off in Japan and other countries outside the United States. Here, Verizon has few rivals in the high-speed market.

AT&T Wireless has EDGE technology, which tops out at around 200 kbps. Sprint PCS is skipping EV-DO to work on the next faster generation.

Sales to cell-phone firms helped Smith Micro revenues jump 33 percent to $2.5 million in its last quarter, ended March 31. Its profit was $103,000, compared with a $250,000 loss a year earlier.

Shares closed Thursday at $1.87.

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(c) 2004, The Orange County Register, Calif. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

SMSI, VZ, VOD PCS, FON,

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