Tuesday, September 19, 2006

Calls of Note Part 7

- Lazard comments on Smith Micro (NASDAQ:SMSI) saying that for the past quarter, Verizon
Wireless has focused its marketing efforts on several VCAST Music handsets including the Verizon-exclusive Chocolate phone. Several of these promotions have included Smith Micro's Music Essentials Kit (MEK) in a packaged deal, including one that even subsidized the entire cost of the MEK. Firm believes that this heavy promotion bodes well for sell-through (and subsequent reorders) of the MEK.

And add healthy PC card sales with a Stuffit renewal cycle...and 3Q looks promising. As per recent bullish comments by the PC card vendors, they expect revenue from QuickLink Mobile to contribute positively to 3Q. Combined with the start of a renewal cycle for Smith Micro's Allume consume software products, it will result in strong revenue growth and favorable gross margins, in our opinion.

Last night, the company filed a shelf offering with the SEC, which will allow it to raise capital more quickly if it decides to do so in the future. Lazard believes that investors should take advantage of any pullback as a result of the announcement.

Reiterates BUY and one-year price target of $24.

Notablecalls: Still looking for that entry point.

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