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What: Shares of communications-software developer Smith Micro (Nasdaq: SMSI) were taking a beating today, falling as much as 26% in intraday trading on heavier-than-average volume.

So what: After the market's close yesterday, Smith Micro reported first-quarter results. The numbers looked pretty discouraging as revenue fell 40% from the first quarter of last year to $17.8 million. That tally did, however, top Wall Street's $17.2 million estimate. The same couldn't be said for Smith Micro's bottom line. A non-GAAP net loss of $0.13 reversed a $0.18 profit last year and missed analysts' target by a penny.

Now what: Maybe even more disconcerting for investors was the company's outlook for the quarter ahead. Management set a revenue-guidance range of $15 million to $20 million, which is easily short of the $24 million that Wall Street was hoping for. At the midpoint of the range, second-quarter sales would show a 44% decline from the second quarter of 2010.

Smith Micro's CEO blamed the current weakness on a purchasing cutback from a major customer but remained optimistic about the broader future for the company, highlighting the continued evolution of the capabilities of mobile-communication devices. At this point, though, investors couldn't be blamed for wanting financial proof of the company's opportunities.

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Fool contributor Matt Koppenheffer has no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.