Smith Micro to Sprint

Industry sources say wireless multimedia software provider Smith Micro Software Inc. (Nasdaq: SMSI) is close to landing a major OEM deal with Sprint Corp. (NYSE: S).

Smith sells various wireless compression and connectivity products, but its main business has become an iTunes-like software, called Quicklink, that enables people to manage their music, image, and video files between their cellphones and their PCs.

The deal would be a huge boon for the small Alisa Viejo, Calif., company. Smith already sells its multimedia manager software to Verizon Wireless , but winning the Sprint gig might put it in another league entirely.

Calls to company founder Bill Smith resulted in a call back from the company's investor relations guy. "I can't comment on speculation," Smith Micro's Bruce Quigley told Light Reading today (Friday). "If we had a deal or relationship with Sprint, or anybody else for that matter, we would put out an announcement."

ThinkEquity LLC analyst Anton Wahlman believes Smith Micro can help Sprint get a leg up in its software arms race with Verizon Wireless. Verizon Wireless, Wahlman says, last November implemented an earlier version of the Smith Micro software that focuses only on music. The latest version of the Quicklink product includes photo and video support on cellphones, Wahlman explains.

"We believe that the world has already moved to video and photos, and that this would be a good time for Sprint to take advantage of this inflection point," Wahlman wrote in an investor brief today.

Wahlman believes Smith Micro has the only software this side of iTunes that can give Sprint the multimedia chops it needs to one-up Verizon. "The industry benchmark is iTunes, but we believe SMSI has built the product that comes the closest to competing with the dominant market share holder," he writes.

Other sources confirmed that Smith is talking to Sprint and may be close to inking a deal. One fly in the ointment is that the share price didn't exactly reflect that traders thought a deal would happen, with Smith Micro shares being down $1.08 (6.07%) to $16.71 in late afternoon trading.

Apple Inc. (Nasdaq: AAPL) -- with partner Cingular Wireless -- recently entered the space with its iPhone, which will feature multimedia content management with an iTunes interface. (See Cingular: The iPhone Price Is Right .)

Smith was founded back in 1982 and went public in 1995.

— Mark Sullivan, Reporter, Light Reading

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