Verizon to use Smith Micro's NetWise middleware platform

Verizon (NYSE: VZ) has inked a deal with Smith Micro to use the company's NetWise data and device management product for an undisclosed service. Smith Micro said it expects revenues from its new Verizon contract to start rolling in in the fourth quarter.

It's unclear exactly what Verizon plans to use Smith Micro's NetWise for. Verizon representatives didn't immediately respond to questions on the topic. And Smith Micro's CEO William Smith declined to provide many details on the agreement during the company's second quarter earnings conference call, where he first announced the deal.

"On the NetWise front, we're making great strides in adapting this platform to address a wide range of market needs for wireless service providers and enterprises," Smith said on the company's earnings conference call, according to a Seeking Alpha transcript. "We recently were selected by Verizon to work on the project utilizing the NetWise platform and we are finalizing deals now with two other Tier 1 operators, including one project with an end-to-end middleware platform and another for dynamic policy management platform."

Smith said Verizon agreed to allow Smith Micro to announce the companies' new deal, but he said he couldn't say anything more about it. He said revenues from Verizon would begin in the fourth quarter and that "revenue ramp will start probably in the first quarter of 2015."

Smith said that the company's NetWise product has been primarily targeted at the Wi-Fi offloading space, but that "it really is so much more." He said that "today we are working with various customers and prospects in defining how to use the policy management capability of NetWise to solve a number of different problems. But please, think about NetWise as a lot more than Wi-Fi offload."

Interestingly, Smith said Smith Micro is "very close" to inking a deal with a "major" cable operator in the United States for NetWise and Wi-Fi. "Consumers are increasingly choosing Wi-Fi first or mobile connectivity due to the high cost of cellular data and growing network congestion problems," he said. "Cable providers are capitalizing on this trend by rolling out Wi-Fi hotspots by the thousands. Our NetWise SmartSpot offering facilitates the Wi-Fi first trend by helping users find, use and maintain high-quality Wi-Fi connections."

Smith Micro's overall revenues in the second quarter were $8.5 million, up slightly sequentially from the first quarter but down 19 percent year-over-year. The company's net loss during the period was $5.7 million, a slight improvement from the $7.2 million it reported in the year-ago quarter. At the end of the second quarter, Sprint (NYSE: S) accounted for fully 70.5 percent of Smith Micro's net revenues and Verizon Wireless accounted for 4.7 percent.

For more:
- see this Seeking Alpha transcript
- see this Smith Micro SEC filing

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