Smith Micro Software (SMSI) 8-K Smith Micro Software Reports Record Fourth Quarter and Fiscal 2006 Results

EXHIBIT 99.1

AT THE COMPANY:
Bruce T. Quigley
Vice President of Corporate Development and
Investor Relations
949-362-5800
bquigley@smithmicro.com IR INQUIRIES:
Charles Messman, Todd Kehrli
MKR Group
323-468-2300
ir@mkr-group.com

NOT FOR IMMEDIATE RELEASE

SMITH MICRO SOFTWARE REPORTS RECORD FOURTH QUARTER AND FISCAL 2006 RESULTS

Fiscal 2006 Revenue Increased 169% to $54.5 Million
Fiscal 2006 Pro Forma Earnings Increased 219% to $17.5 Million or $0.69 per Diluted Share;
Fourth Quarter Revenue Increase of 115% to $17.2 Million
Fourth Quarter Pro Forma Earnings Increased 168% to $7.0 Million or $0.26 per Diluted Share

Aliso Viejo, Calif., February 28, 2006— Smith Micro Software, Inc. (NASDAQ: SMSI), a developer and marketer of a wide range of software solutions for the wireless market, today reported its 2006 fourth quarter and 2006 financial results.

Fourth Quarter 2006 Key Financial Results:

• Revenue increased to a record $17.2 million, up 115% year-over-year.

• Pro Forma Net Income was a record $7.0 million, compared to pro forma net income of $2.6 million in the fourth quarter of 2005.

• Pro Forma earnings were a record $0.26 per diluted share on 26.7 million shares, compared to pro forma earnings of $0.11 per diluted share in the fourth quarter of 2005 on 23.9 million shares.

Fiscal Year 2006 Key Financial Results:

• Revenue increased to a record $54.5 million, up 169% year-over-year.

• Pro Forma Net Income was a record $17.5 million, compared to pro forma net income of $5.5 million for fiscal 2005.

Smith Micro 2006 Fourth Quarter and Year-End Financial Results Page 2 of 12

• Pro Forma earnings were a record $0.69 per diluted share on 25.3 million shares, compared to pro forma earnings of $0.24 per diluted share in Fiscal 2005 on 22.8 million shares.

• Cash Flow from operations was $14.8 million, up $12.3 million from Fiscal 2005, or 499%.

Financial Discussion:

“We are very pleased with the fourth quarter and year-end 2006 financial results,” said William W. Smith, Jr., President and CEO of Smith Micro Software, Inc. “During the fiscal year we achieved several milestones as we continue to position the Company as the leader in the wireless software marketplace. Not only did we achieve record financials results on both the top and bottom line for the seventh quarter in a row, we also significantly expanded our product solutions both internally and through acquisitions. On the acquisitions front we acquired Photags, Inc. in April 2006, which expanded our multimedia platform. We also announced two additional acquisitions, Ecutel Systems Inc., and Insignia Solutions, plc. Ecutel, whose product line adds significant technology of persistent IP roaming for our connectivity products, provides additional security and device management features for our enterprise solutions. On February 11^th we also announced an agreement to acquire the assets of Insignia Solutions plc, which will bring additional wireless data services to our product offerings such as firmware update over the air, and device management. Another significant synergy is Insignia’s strong worldwide customer base which provides attractive cross-selling opportunities. As a whole, these acquisitions bring us instant international expansion, an expanded sales force presence, and several new development teams to drive product development.”

Mr. Smith continued, “As well as acquiring new technologies and products solutions, we also launched several new products which have driven our sales growth. In September 2006, we launched our flagship product “Quicklinkâ Music”, which has been a significant revenue generator for the company. To date we have signed on two carriers, and we will continue to work hard to sign additional carriers both domestically and internationally in the coming year. We also expanded our Stuffitâ Wireless solution and continue to make progress with our sales efforts with major handset manufacturers.”

Smith Micro 2006 Fourth Quarter and Year-End Financial Results Page 3 of 12

Mr. Smith concluded, “Although we have made significant strides with our business case in 2006, I believe we have only begun to touch the surface of the opportunity that lies ahead of us. We look to 2007 and expect to see a continuation of strong financial results, continued roll out of new solutions for our growing customer base, and expansion into new market opportunities as we continue to build our leadership position in the wireless software space.

Smith Micro reported record net revenue of $17.2 million for the fourth quarter ended December 31, 2006, a 115% increase when compared to the $8.0 million recorded in the fourth quarter of 2005. Fiscal year 2006 revenue was a record $54.5 million, as compared to $20.3 million for fiscal 2005.

Pro forma net income (which excludes amortization of intangible assets associated with acquisitions, stock compensation related expenses and non-cash tax expenses) for the fourth quarter of 2006 was $7.0 million, or $0.26 per diluted share, compared to pro forma net income of $2.6 million or $0.11 per diluted share in the fourth quarter of 2005. Diluted shares outstanding as of December 31, 2006 increased significantly to 26.7 million as compared to the 23.9 million shares outstanding in the fourth quarter of 2005.

Pro forma net income for fiscal 2006 was $17.5 million or $0.69 per diluted share as compared to $5.5 million or $0.24 per diluted share for fiscal 2005. Diluted shares attributed to fiscal 2006 were 25.3 million as compared to 22.8 million in fiscal 2005.

On a GAAP basis, the company earned $0.14 per diluted share for the fourth quarter of 2006 as compared to $0.09 per diluted share in the fourth quarter of 2005. GAAP diluted EPS for fiscal 2006 was $0.35 as compared to $0.21 for fiscal 2005.

Total cash and equivalents at December 31, 2006 increased significantly to $92.6 million, compared to $21.2 million at December 31, 2005. The company successfully completed a secondary offering which brought the company an additional $55.0 million in December.

The Company uses pro forma reconciliation of its condensed consolidated statements of income in the presentation of financial results in this press release. Management believes that this presentation may be more meaningful in analyzing our results of operations and income

Smith Micro 2006 Fourth Quarter and Year-End Financial Results Page 4 of 12

generation, since amortization of intangibles from acquisitions, amortization of deferred stock-based compensation and impairment gains and losses on investments, and non-cash tax expense are excluded from the pro forma earnings calculation. This presentation may be considered more indicative of our ongoing operational performance. The tables below present the differences between pro forma earnings and net income on an absolute and per share basis.

Investor Conference Call
Smith Micro will hold an investor conference call to discuss the company’s fourth quarter results at 4:30 p.m. Eastern time today, February 28, 2007. The call can be accessed by dialing(800) 218-4007and giving the pass code “SMSI.” Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. In addition, the conference call will be available over the Internet at www.smithmicro.com in the Investor Relations section.

About Smith Micro Software:
Smith Micro Software, Inc., headquartered in Aliso Viejo, CA, is a developer and marketer of wireless communications and utility software products for multiple OS platforms. The company designs easy-to-use software for personal computing and business solutions around the world. With a focus on wireless and broadband technologies and the Internet, the company’s products and services enable wireless communications, file and image compression, digital image and music management. In addition, Smith Micro develops and publishes award-winning software solutions for Windows and Macintosh, empowering users in the areas of information access, removal, recovery, security, and Internet distribution. Smith Micro’s leading brands are QuickLink^®, StuffIt^®, CheckIt^®, Internet Cleanup™ and Spring Cleaning^®. Smith Micro’s complete line of products is available through retail stores, Value-Added Resellers (VARs), Smith Micro’s consumer, enterprise, wireless OEM sales groups and the company’s websites. Smith Micro’s common stock trades on The NASDAQ Global Market^® under the symbol SMSI.

Safe Harbor Statement: This release may contain forward-looking statements that involve risks and uncertainties, including without limitation forward-looking statements relating to the company’s financial prospects and projections, the company’s ability to increase its business and the anticipated timing and financial performance of new products and potential acquisitions. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are new and changing technologies, customer acceptance of those technologies, fluctuations or cancellations in orders from customers, new and continuing adverse economic conditions, and the company’s ability to

Smith Micro 2006 Fourth Quarter and Year-End Financial Results Page 5 of 12

compete effectively with other software companies. These and other factors discussed in the company’s filings with the Securities and Exchange Commission, including its filings on Forms 10-K and 10-Q, could cause actual results to differ materially from those presented in any forward-looking statements. Smith Micro assumes no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this press release.

Smith Micro, the Smith Micro logo, QuickLink and StuffIt are trademarks or registered trademarks of Smith Micro Software, Inc. All other trademarks and product names are the property of their respective companies.

Note: Financial Schedules Attached

Smith Micro 2006 Fourth Quarter and Year-End Financial Results Page 6 of 12

Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months Ended December 31, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc., stock compensation and non-cash income tax expenses)
(in thousands, except per share amounts)

	Per GAAP		Adjustments			Proforma
NET REVENUE
Products	$	17,082	$	—		$	17,082
Services		146		—			146
Total Net Revenues		17,228		—			17,228
COST OF SALES
Products		5,504		(260	)		5,244
Services		60		0			60
Total Cost of Sales		5,564		(260	)		5,304
GROSS PROFIT
Products		11,578		260			11,838
Services		86		—			86
Total Gross Profit		11,664		260			11,924
OPERATING EXPENSES
Selling & Marketing		2,517		(684	)		1,833
Research & Development		2,274		(295	)		1,979
General & Administrative		2,701		(1,022	)		1,679
Total Operating Expenses		7,492		(2,001	)		5,491
Operating Income		4,172		2,261			6,433
Interest Income		532					532
Income Before Income Taxes		4,704		2,261			6,965
Income Tax Expense		1,094		(1,094	)		—
Net Income	$	3,610	$	3,355		$	6,965
Income Per Share, Basic	$	0.14				$	0.28
Weighted Average Shares Outstanding, Basic		24,930					24,930
Income Per Share, Diluted	$	0.14				$	0.26
Weighted Average Shares Outstanding, Diluted		26,687					26,691

Smith Micro 2006 Fourth Quarter and Year-End Financial Results Page 7 of 12

Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months Ended December 31, 2005
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc.)
(in thousands, except per share amounts)

	Per GAAP		Adjustments			Proforma
NET REVENUE
Products	$	7,856	$	—		$	7,856
Services		146		—			146
Total Net Revenues		8,002		—			8,002
COST OF SALES
Products		1,983		(267	)		1,716
Services		65		0			65
Total Cost of Sales		2,048		(267	)		1,781
GROSS PROFIT
Products		5,873		267			6,140
Services		81		—			81
Total Gross Profit		5,954		267			6,221
OPERATING EXPENSES
Selling & Marketing		1,307		(118	)		1,189
Research & Development		1,325					1,325
General & Administrative		1,254					1,254
Total Operating Expenses		3,886		(118	)		3,768
Operating Income		2,068		385			2,453
Interest Income		192					192
Income Before Income Taxes		2,260		385			2,645
Income Tax Expense		49					49
Net Income	$	2,211	$	385		$	2,596
Income Per Share, Basic	$	0.10				$	0.12
Weighted Average Shares Outstanding, Basic		22,106					22,106
Income Per Share, Diluted	$	0.09				$	0.11
Weighted Average Shares Outstanding, Diluted		23,900					23,900

Smith Micro 2006 Fourth Quarter and Year-End Financial Results Page 8 of 12

Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Twelve Months Ended December 31, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc., stock compensation and non-cash income tax expenses)
(in thousands, except per share amounts)

	Per GAAP		Adjustments			Proforma
NET REVENUE
Products	$	53,773	$	—		$	53,773
Services		696		—			696
Total Net Revenues		54,469		—			54,469
COST OF SALES
Products		19,989		(1,119	)		18,870
Services		270		0			270
Total Cost of Sales		20,259		(1,119	)		19,140
GROSS PROFIT
Products		33,784		1,119			34,903
Services		426		—			426
Total Gross Profit		34,210		1,119			35,329
OPERATING EXPENSES
Selling & Marketing		9,057		(2,560	)		6,497
Research & Development		7,899		(1,088	)		6,811
General & Administrative		8,467		(2,605	)		5,862
Total Operating Expenses		25,423		(6,253	)		19,170
Operating Income		8,787		7,372			16,159
Interest Income		1,403					1,403
Income Before Income Taxes		10,190		7,372			17,562
Income Tax Expense		1,234		(1,182	)		52
Net Income	$	8,956	$	8,554		$	17,510
Income Per Share, Basic	$	0.38				$	0.74
Weighted Average Shares Outstanding, Basic		23,753					23,753
Income Per Share, Diluted	$	0.35				$	0.69
Weighted Average Shares Outstanding, Diluted		25,330					25,330

Smith Micro 2006 Fourth Quarter and Year-End Financial Results Page 9 of 12

Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Twelve Months Ended December 31, 2005
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. )
(in thousands, except per share amounts)

	Per GAAP		Adjustments			Proforma
NET REVENUE
Products	$	19,637	$	—		$	19,637
Services		621		—			621
Total Net Revenues		20,258		—			20,258
COST OF SALES
Products		3,818		(534	)		3,284
Services		285		0			285
Total Cost of Sales		4,103		(534	)		3,569
GROSS PROFIT
Products		15,819		534			16,353
Services		336		—			336
Total Gross Profit		16,155		534			16,689
OPERATING EXPENSES
Selling & Marketing		3,410		(236	)		3,174
Research & Development		3,963					3,963
General & Administrative		4,621					4,621
Total Operating Expenses		11,994		(236	)		11,758
Operating Income		4,161		770			4,931
Interest Income		667					667
Income Before Income Taxes		4,828		770			5,598
Income Tax Expense		104					104
Net Income	$	4,724	$	770		$	5,494
Income Per Share, Basic	$	0.22				$	0.26
Weighted Average Shares Outstanding, Basic		21,351					21,351
Income Per Share, Diluted	$	0.21				$	0.24
Weighted Average Shares Outstanding, Diluted		22,806					22,806

Smith Micro 2006 Fourth Quarter and Year-End Financial Results Page 10 of 12

Smith Micro Software, Inc.
Statement of Operations for the Three Months Ended December 31, 2006 and 2005
(in thousands, except per share amounts)

	2006		2005
NET REVENUE
Products	$	17,082	$	7,856
Services		146		146
Total Net Revenues		17,228		8,002
COST OF SALES
Products		5,504		1,983
Services		60		65
Total Cost of Sales		5,564		2,048
GROSS PROFIT
Products		11,578		5,873
Services		86		81
Total Gross Profit		11,664		5,954
OPERATING EXPENSES
Selling & Marketing		2,517		1,307
Research & Development		2,274		1,325
General & Administrative		2,701		1,254
Total Operating Expenses		7,492		3,886
Operating Income		4,172		2,068
Interest Income		532		192
Income Before Income Taxes		4,704		2,260
Income Tax Expense		1,094		49
Net Income	$	3,610	$	2,211
Income Per Share, Basic	$	0.14	$	0.10
Weighted Average Shares Outstanding, Basic		24,930		22,106
Income Per Share, Diluted	$	0.14	$	0.09
Weighted Average Shares Outstanding, Diluted		26,687		23,900

Smith Micro 2006 Fourth Quarter and Year-End Financial Results Page 11 of 12

Smith Micro Software, Inc.
Statement of Operations for the Twelve Months Ended December 31, 2006 and 2005
(in thousands, except per share amounts)

	2006		2005
NET REVENUE
Products	$	53,773	$	19,637
Services		696		621
Total Net Revenues		54,469		20,258
COST OF SALES
Products		19,989		3,818
Services		270		285
Total Cost of Sales		20,259		4,103
GROSS PROFIT
Products		33,784		15,819
Services		426		336
Total Gross Profit		34,210		16,155
OPERATING EXPENSES
Selling & Marketing		9,057		3,410
Research & Development		7,899		3,963
General & Administrative		8,467		4,621
Total Operating Expenses		25,423		11,994
Operating Income		8,787		4,161
Interest Income		1,403		667
Income Before Income Taxes		10,190		4,828
Income Tax Expense		1,234		104
Net Income	$	8,956	$	4,724
Income Per Share, Basic	$	0.38	$	0.22
Weighted Average Shares Outstanding, Basic		23,753		21,351
Income Per Share, Diluted	$	0.35	$	0.21
Weighted Average Shares Outstanding, Diluted		25,330		22,806

Smith Micro 2006 Fourth Quarter and Year-End Financial Results Page 12 of 12

Smith Micro Software, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

	December 31,			December 31,
	2006			2005
ASSETS
Current Assets:
Cash & Cash Equivalents	$	92,564		$	21,215
Accounts Receivable, (Net)		9,828			6,786
Income Taxes Receivable		122			—
Deferred Tax Asset — Current		90			—
Inventory		857			530
Prepaid & Other Assets		308			556
Total Current Assets		103,769			29,087
Equipment & Improvements, Net		417			241
Deferred Tax Asset — Long Term		7,786			—
Goodwill		15,266			9,288
Intangible Assets, Net		3,788			4,093
Other Assets		—			7
TOTAL ASSETS	$	131,026		$	42,716
LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	2,941		$	2,383
Accrued Liabilities		2,028			1,376
Total Current Liabilities		4,969			3,759
Common Stock		28			22
Additional Paid In Capital		129,018			50,880
Accumulated Deficit		(2,989	)		(11,945	)
Total Stockholders’ Equity		126,057			38,957
TOTAL LIABILITIES & EQUITY	$	131,026		$	42,716

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