Shares of Aliso Viejo’s Smith Micro Software Inc., a maker of connection management software for mobile devices, plummeted Wednesday after the company lowered its sales outlook for the current quarter, citing a sudden drop off in orders and a slower roll out of next-generation wireless networks.
Investors sent shares freefalling–the stock closed down more than 35% on a recent market value of about $280 million.
Smith Micro said it expects sales for the current quarter to come in at $15 million to $20 million, short of Wall Street’s expectations of $35 million in sales.
The company sees orders coming in below expectations due to a build of inventory at one of its top customers.
Smith Micro didn’t name the customer. It could be Verizon Wireless, a unit of New York’s Verizon Communications Inc., which accounted for about 30% of its sales last year.
“Orders in the first quarter for our core connection manager product, primarily from a key customer, will fall below expected levels,” the company said in a statement. “We believe this has occurred as a result of our customer carrying sufficient inventory to support sales of mobile broadband services for the first quarter.”
Smith Micro also suspended its yearly guidance. It will give quarterly updates instead.
The company had projected sales of $150 million to $160 million this year, which would be up about 20% from a year earlier and in line with analysts’ expected $154 million in sales.
It didn’t give a profit outlook.
Analysts, on average, were looking for yearly profits of $33 million, up about 14% from a year earlier
The pause on the yearly outlook is due to a slower rollout of fourth-generation, or 4G, wireless networks by the major carriers, according to Chief Executive Bill Smith.
“The rollout of new wireless networks are major new initiatives that take time to fully develop,” he said. “We believe that our customer relationships remain strong, and the current first quarter revenue impact is due primarily to the timing of new product roll-outs and sales of existing inventory.”
4G promises to boost download speeds, allowing people to do more with their smartphones.
Rollouts started at the end of last year. Verizon Wireless is in the lead with what it calls its long-term evolution 4G network.
