Investors are on the edge of their collective seats, hoping that Smith Micro Software (Nasdaq: SMSI) will top analyst expectations for the third consecutive quarter. The company will unveil its latest earnings on Tuesday, August 2. Smith Micro Software designs, develops and markets software products and services for the mobile industry.
What analysts say:
- Buy, sell, or hold?: Analysts think investors should stand pat on Smith Micro Software with 11 of 15 analysts rating it hold. Analysts don't like Smith Micro Software as much as competitor Interactive Intelligence overall. Seven out of eight analysts rate Interactive Intelligence a buy compared to four of 15 for Smith Micro Software. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.
- Revenue Forecasts: On average, analysts predict $17.8 million in revenue this quarter. That would represent a decline of 43.2% from the year-ago quarter.
- Wall Street Earnings Expectations: The average analyst estimate is a loss of $0.21 per share. Estimates range from a loss of $0.23 to a loss of $0.19.
What our community says:
CAPS All-Stars are solidly backing the stock with 97% giving it an "outperform" rating. The community at large concurs with the All-Stars with 96.1% awarding it a rating of "outperform." Fools are gung-ho about Smith Micro Software and haven't been shy with their opinions lately, logging 263 posts in the past 30 days. Even with a robust four out of five stars, Smith Micro Software's CAPS rating falls a little short of the community's upbeat outlook.
Management:
A year-over-year revenue decrease last quarter snaps a streak of three consecutive quarters of revenue increases. The company's gross margin shrank by 8.7 percentage points in the last quarter. Revenue fell 40.4% while cost of sales rose 1.2% to $3.8 million from a year earlier.
Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.
| Quarter | Q1 | Q4 | Q3 | Q2 |
| Gross Margin | 78.8% | 88.5% | 88.9% | 87.4% |
| Operating Margin | -73.1% | 16.8% | 17.2% | 11.7% |
| Net Margin | -43.6% | 16.4% | 9.1% | 6% |
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